Monetary targeting, however, continued in some form in many bank-based economies in continental Europe such as Germany, France and Switzerland where it was possible to establish money demand stability with redefinition of monetary aggregates. 10. Given the under-developed nature of financial markets coupled with the quantitybased credit channel of monetary transmission, money target was considered suitable in case of developing countries.
In the 1980s, monetary targeting was adopted in many developing countries such as Brazil, China, Indonesia, Korea, Malaysia, Peru, Philippines, Russia and Venezuela. As financial innovations spread to developing countries and they became more open to external capital flows, monetary targeting proved less effective. 2  Bernanke, Ben S. “Constrained Discretion and Monetary Policy”.