While Berlin denounced QE as a source of instability, Europe’s banks took a very different view. For every billion dollars’ worth of securities the Fed purchased, it credited an account with a corresponding amount of dollars. But who was it that held those dollar accounts with the Fed and thus “funded” QE? As the Fed’s statistics show, it was not America’s banks that took advantage of QE to unload large portfolios of bonds or to hold cash, though some American pension funds and mutual funds did sell bonds to the Fed. The banks most actively involved in QE2 were not American but European,
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