Nik Bhatia Eurodollar: Brazilian bank with $1M USD loans to customer. Customer takes $1M USD and lights it on fire. Bank writes it off as a loss and captures customer collateral. Where in this process is the Fed *required* to come up with $1M extra dollars from this $1M euro dollars floating around? I would think they are only required to eventually print the assets(dollars) that US banks have accumulated (printed) through loans.