The monetary authority could therefore show some preference for avoiding fluctuations in the currency rate if the latter could seemingly originate “balance-sheet” effects that might end up affecting the solvency of the financial  2  BIS Review 14/2009  system. In fact, the presence of currency mismatches has been at the root of the most important crises, or has contributed to amplify them.
Indeed, under existing tax rates and reasonable assumptions about other spending, these projections make clear that the federal budget is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years. But most important, deficits as a percentage of GDP in these simulations rise without limit.