"The Fed was not the only central bank creating fiat money and buying Dollar assets last year."In order to prevent their currencies from appreciating, many central banks around the world created their own money and used it to buy the Dollars entering their economies as a result of their trade surpluses with the US."Once they had acquired the Dollars, they invested them in US Dollar assets to earn a return. This, then, was a second source of liquidity. It can be measured by the increase in foreign exchange reserves."
"2015 will mark the peak of reserve accumulation after two decades of growth with China in the vanguard as its new currency regime means it has to pare reserves to avoid a free fall in the Yuan."It has already reduced its holdings to $3.65 trillion from $3.99 trillion in 2014. 'This force is likely to be a persistent headwind towards developed market central banks' exit from unconventional policy in coming years, representing an additional source of uncertainty in the global economy,' said [George] Saravelos [head of European foreign exchange strategy at Deutsch Bank] and colleagues in a report to clients on Tuesday. 'The path to 'normalization' will likely remain slow and fraught with difficulty.'..."