The tables and figures below are from the detailed report "The Accumulation of Foreign Reserves" posted on the European Central Bank's web site. The introduction says:
The ensuing report ... investigated the features, drivers, risks and costs of reserve accumulation, as well as the other uses that certain countries have been making of their accumulated foreign assets. The report also reviewed the main trends in central bank reserve management and provided some evidence for the impact of reserve accumulation on yields and asset prices.
The European Central Bank said today the U.S. current- account deficit, the widest measure of U.S. trade, is being funded in part by an "unprecedented" increase in world foreign- exchange reserves that may not take all risks into account. Since January 2002 world reserves have risen by 91 percent, the ... ECB said ... A "significant share" of the U.S. deficit is financed by countries "pursuing objectives that are, to some extent, insensitive to risk-return considerations," ... a reference to purchases by central banks.
And from the Financial Times:
Asian countries’ rapid and “unprecedented” accumulation of foreign reserves is heightening the dangers of inflation and asset bubbles, the European Central Bank has warned. World foreign exchange reserves have tripled in the past decade ... with the rate of increase accelerating in the past few years. As a result, a series of “risks and costs” could materialise ... the study highlighted mounting concerns about so-called global imbalances...
The report says that the rapid accumulation of foreign reserves has reflected the desire of emerging economies to “self insure” against financial crises, rather than rely on institutions such as the International Monetary Fund. Another factor has been the under-developed financial systems of such countries and the global role of the dollar and US financial institutions. Emerging economies have also accumulated reserves as part of policies aimed at boosting exports by anchoring exchange rates to the dollar. But the ECB report points out that intervening in foreign exchange markets creates inflationary dangers and can fuel asset price bubbles and that “interventions have been larger and more prolonged in recent years”. ... Other “risks and costs” ... included the misallocation of investment, difficulties in managing monetary policy and “potentially sizable capital losses” at central banks if exchange rates were to change suddenly...
Here are a few figures and tables from the report: