``And all of this really begs the question: to what degree can the Federal Reserve's balance sheet be counted on as the markets' future liquidity backstop? Actually, whether the Fed builds its holdings ("prints money") or not is of seemingly little concern to the markets - that is so long as the markets remain buoyant (as they've been). Yet an eruption of de-risking/de-leveraging would have this backstop issue quickly elevated to the top of market worries. Moreover, this liquidity issue would be significantly compounded if the change in China's currency policy incites a reversal of "hot money" flows and, perhaps, a resulting turnabout in China's international reserve holdings. ''

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