Global reserves have been in decline since a peak around August 2014 but the erosion has been precipitous during the past six months, partly due the collapse in the oil price but also changes to China's currency policy leading to capital outflows.
There are other factors at play serving as de facto tightening. One is the global regulatory response to the GFC and other recent crises.
At an international level, entities such as the Basel Committee have issued a range of recommendations that act to constrain financial institutions' risk-taking.
Sundry regulators at a domestic level are implementing multiple initiatives, profoundly impacting liquidity conditions and funding markets.
Cumulatively, these will act as a brake or headwind to otherwise accommodative monetary conditions.
The theory of QT first emerged from the analysis of global market volatility in August last year, coinciding with changes to China's currency policy and the rising expectations of a Fed hike in interest rates.
The price reaction was consistent with a tightening in global liquidity conditions and with the benefit of hindsight is now viewed as the transition point between the unchallenged regime of QE and the new paradigm of QT.
The accumulation of these QT forces is significant and seems likely to persistent, albeit less obvious than the more conventional monetary tightening underway in the US.
We believe QT has the potential to be a macro dynamic influencing market conditions for the foreseeable future.
Greg Peacock is Chief Investment Officer at NZAM, an Auckland-based global fund of funds manager