There are more macroeconomic reasons for the Americans to be more concerned than the Europeans.

The bigger the reserves get, the more nervous China is likely to be about keeping them predominantly in dollars. China's probably not going to do a lot with its existing reserves, but what it might do is put a smaller portion of its new reserves into dollars.

It is possible that Iceland is the tip of the iceberg, the first domino to fall, albeit a very small one.

There is the risk the investment boom in China turns to bust and that would have a knock-on effect on the rest of the world. Higher rates may take off some of the froth from commodities markets which have benefited from the investment boom.

If we had 70.0 dollars per barrel on oil prices in the midst of a recession, I would be very worried, but 70.0 dollars when the world economy is growing at over 4.0 percent is not such a big worry.

There are clear expectations that the pace of appreciation is going to accelerate and that's reassuring because it's one of the key factors in easing trade tensions with the U.S..