What if an economy tried to get as close to a perfect balance of all 3 parts of the Impossible Trinity as it could get? That is, what if an economy had the following features? - 1. Mostly free capital flows, where some limited capital controls are still present (such as a small tax on the inflow and/or outflow of capital for example). - 2. A non-fixed but resilient exchange rate, where the value of the economy's currency would remain mostly the same as a fixed fraction or multiple of the value of another commodity (such as the U.S. dollar, or the gold standard), but could also be allowed to deviate slowly over time (such as the value of a currency in relation to, say, the U.S. dollar possibly changing from a ratio of, say, 1:1 from one year to, say, 0.99:1 or 1.01:1 the next year). - 3. A mostly independent monetary policy, with banks being given some leeway to change interest rates, and with inflation being kept low.
Can you have a system with limited capital flow restrictions, independent monetary policy and a floating band exchange rate ....... I think India has such a system, its currency has never stopped depreciation though, the central bank steps in to slow down the rate of depreciation.
Literally the reason I will pass tomorrow, thank you so much for the free support!
Delighted to help Sena. Best wishes!
You explained this way better than a lot of other videos. Thanks!
Thank you for the thorough explanation. Wish CFA could explain this in such a way
You made me understand this topic very well in just 7 mins..
Great explanation. I like the diagram with the example. thank you for taking the time.
My guardian angel!!! Thank you so much Sir.
very good examples.
Thank you this video was so informative and really helped me with my studies
great explanation, better than the lecture by a mile
where does Bitcoin stand on this triangle? thanks
great vid, thanks mate
Really explicit explanation, thank you
excellent, thorough explanation! thank you very much.
very helpful, thanksd!
What if an economy tried to get as close to a perfect balance of all 3 parts of the Impossible Trinity as it could get? That is, what if an economy had the following features?
- 1. Mostly free capital flows, where some limited capital controls are still present (such as a small tax on the inflow and/or outflow of capital for example).
- 2. A non-fixed but resilient exchange rate, where the value of the economy's currency would remain mostly the same as a fixed fraction or multiple of the value of another commodity (such as the U.S. dollar, or the gold standard), but could also be allowed to deviate slowly over time (such as the value of a currency in relation to, say, the U.S. dollar possibly changing from a ratio of, say, 1:1 from one year to, say, 0.99:1 or 1.01:1 the next year).
- 3. A mostly independent monetary policy, with banks being given some leeway to change interest rates, and with inflation being kept low.
the country needs a very strong monetary reserve and economy in order to do this.
is the united arab emirites in the same position as hong kong?
Amazing explanation
thank you quite a lot, very useful, good video.
Thanks for explaining!
Thank you for the video! Really helpful!
Good explanation. Thank you, Sir.
Thank you for this video
Can you have a system with limited capital flow restrictions, independent monetary policy and a floating band exchange rate ....... I think India has such a system, its currency has never stopped depreciation though, the central bank steps in to slow down the rate of depreciation.
Thank you sir for the perfect explanation
Amazing sir well done
Good video but is this video shoot before 1997?
The title should be the exchange rate trilemma not dilemma
Hey. Thanks for watching. A dilemma can be plural too. But, yes also referred to as a trilemma. Best wishes.