The impact of a reduction in the scale of official accumulation of dollar assets could be fully offset by increases in purchases by private investors. But even in the context of a continued high degree of confidence in the relative return on claims on the United States, it is hard to know with confidence how the preferences of private savers might respond to the process of gradual evolution in their nation’s exchange rate regimes now underway.

[A] substantial part of the world economy...has an interest in shadowing the dollar closely, as they absorb excess capacity, and...these governments are likely to continue to want to acquire dollars to make that exchange rate objective possible.