By way of illustration, Asian central banks have now accumulated more than a trillion dollars of international currency reserves - largely in dollar-denominated assets - equal to roughly half of the outstanding net debt of the United States. These central banks are not traditional wealth-holders motivated by expected risks and returns.
Instead, they seem motivated more by the prospect of preserving low domestic currency values for their exporters.10 To pursue this objective, they can print money to buy U.S. securities. This monetary expansion could generate domestic inflation unless it is sterilized with other open market sales of securities - and the mere scale of present and expected future debt stocks may make continued sterilization impossible.