China's foreign-exchange reserves are growing, no doubt. They just aren't growing as fast as they used to - and that could spell trouble for the euro.
That's the view of Simon Derrick, chief currency strategist at Bank of New York Mellon. Derrick has reviewed the evolution of China's reserve policy, and found a series of statements by policymakers indicating that the slowing reserve growth "has, at least in part, been driven by a genuine shift in behavior by China."
Chinese officials were alarmed by the 2011 U.S. debt ceiling debate, Derrick says, citing a Financial Times commentary by Yu Yongding, who was an academic member of the People's Bank of China's monetary policy committee. The commentary stated that "If there is any lesson China can draw from the US debt ceiling crisis, it is that it must stop policies that result in further accumulation of foreign exchange reserves," even if that means allowing the yuan to float more freely.
Sure enough, China has since loosened the trading band on the yuan and is showing some guarded tolerance for a stronger currency.
(Read more: China's Floating Exchange Rate: CNBC Explains)
At the same time, Derrick says, "we certainly would not dispute the idea that China has more than sufficient reserves (USD 3.31 Trn) to deal with all but the most extreme of circumstances."
So it's probably not surprising that the growth of China's FX reserves is slowing. What's more complicated is what it means for currencies, and here Derrick has a clear view.