Among other things, Laubach has an interesting way to remove cyclical effects from his dependent variables, interest rates. 4  BIS Review 12/2004  denomination effect would not permanently prevent any relative price adjustment, but it could lengthen the process. Beyond that, for pragmatic reasons this conventional adjustment process could be extended or distorted even further.
By way of illustration, Asian central banks have now accumulated more than a trillion dollars of international currency reserves - largely in dollar-denominated assets - equal to roughly half of the outstanding net debt of the United States. These central banks are not traditional wealth-holders motivated by expected risks and returns.