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The financial trilemma

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  • Schoenmaker, Dirk

Abstract

The financial trilemma states that financial stability, financial integration and national financial policies are incompatible. Any two of the three objectives can be combined but not all three; one has to give. This paper develops a model to underpin the financial trilemma.

Suggested Citation

  • Schoenmaker, Dirk, 2011. "The financial trilemma," Economics Letters, Elsevier, vol. 111(1), pages 57-59, April.
  • Handle: RePEc:eee:ecolet:v:111:y:2011:i:1:p:57-59
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    References listed on IDEAS

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    1. Acharya, Viral V., 2009. "A theory of systemic risk and design of prudential bank regulation," Journal of Financial Stability, Elsevier, vol. 5(3), pages 224-255, September.
    2. Maurice Obstfeld & Jay C. Shambaugh & Alan M. Taylor, 2005. "The Trilemma in History: Tradeoffs Among Exchange Rates, Monetary Policies, and Capital Mobility," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 423-438, August.
    3. De Bandt, Olivier & Hartmann, Philipp, 2000. "Systemic risk: A survey," Working Paper Series 35, European Central Bank.
    4. Donato Masciandaro (ed.), 2005. "Handbook of Central Banking and Financial Authorities in Europe," Books, Edward Elgar Publishing, number 3387.
    5. Daniel Sullivan, 1994. "Measuring the Degree of Internationalization of a Firm," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 25(2), pages 325-342, June.
    6. Dirk Schoenmaker & Christiaan van Laecke, 2007. "Current State of Cross-Border Banking," World Scientific Book Chapters, in: Douglas D Evanoff & George G Kaufman & John R LaBrosse (ed.), International Financial Instability Global Banking and National Regulation, chapter 5, pages 39-63, World Scientific Publishing Co. Pte. Ltd..
    7. Charles Goodhart & Dirk Schoenmaker, 2009. "Fiscal Burden Sharing in Cross-Border Banking Crises," International Journal of Central Banking, International Journal of Central Banking, vol. 5(1), pages 141-165, March.
    8. Dani Rodrik, 2000. "How Far Will International Economic Integration Go?," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 177-186, Winter.
    9. Abdul Abiad & Daniel Leigh & Ashoka Mody, 2009. "Financial integration, capital mobility, and income convergence [Unbundling institution]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 24(58), pages 241-305.
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    More about this item

    Keywords

    Financial stability Public good International finance;

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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