Certainly, the financial environment in which U.S. monetary policy is made has been irrevocably changed by the remarkable increases in the magnitudes of financial flows into and out of the United States. A quarter-century ago, foreign holdings of U.S. financial assets were limited, and therefore, the influence of foreign investors and foreign financial conditions on U.S. financial markets was in most cases relatively modest.
As I have already noted, that situation has changed markedly, as global financial markets have become increasingly integrated and both foreign and domestic investors have become more diversified internationally. Today, foreigners hold about one-quarter of the long-term  BIS Review 21/2007  1  fixed-income securities issued by U.S. entities of all types and more than half of publicly-held U.S. Treasury securities.