The president of the Federal Reserve Bank of Chicago, Charles Evans, on Wednesday countered criticism that the Fed's aggressive loosening of monetary policy has led to a deluge of funds in developing nations such as China, saying the U.S. response to the financial crisis averted greater damage to the global economy and that the fund injections have mostly remained in the U.S.

China's banking regulator said in November that low U.S. interest rates had inflated speculative bubbles around the world. Beijing is trying to restrain surging housing prices and credit growth, efforts that would be complicated by funds entering from the U.S.

"Banks in the U.S. have a lot of the liquidity on the balance sheet as excess reserves. Most of this is staying in the U.S.," Evans said at a news briefing on his first trip to China, when asked about criticism of the Fed's move to inject liquidity into the financial system by buying assets, such as longer-term Treasuries.

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