While this is an issue which was already discussed before the crisis, some argue it might have been exacerbated as a result of policy responses to the crisis. Indeed, some of the policy responses have been sub-optimal from a global vantage point. Many countries have continued to accumulate large reserve holdings to limit currency appreciation.
For instance, China’s reserve holdings now exceed USD 3 trillion; those of Russia USD 400 billion; those of Brazil, Korea or Taiwan USD 300 billion. Others have adopted capital flow management measures, including higher reserve requirements and – sometimes – outright controls on capital inflows. Some observers have claimed that “currency wars” might break out.