He's Got The Whole World, In A Graph

The debate inside China about how to slow the pace of China's reserve growth--a debate that most in the market seem to assume won't lead to major policy changes--is one bit of evidence. Fan Gang of China's Monetary Policy Committee hasn't exactly hidden his doubts about China's growing exposure to the dollar:

"The U.S. dollar is no longer a stable anchor in the global financial system, nor is it likely to become one," said Fan Gang, a member of the Monetary Policy Committee of the Chinese central bank and director of the National Economic Research Institute. "Thus it is time to look for alternatives."

... The real risk is not that China will increase its yen holdings at the margin--it is that it will no longer be willing to add to its dollar holdings.