How Central Banks Manage the Trilemma of Exchange Rates

Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates · Jun 1, 2026 · 7m · transcript

Lucas and Luna dive into the impossible trinity, also known as the trilemma of international finance. Using the case of the Swiss National Bank in 2015, when it abruptly abandoned its euro peg, they explain why no central bank can simultaneously have a fixed exchange rate, free capital movement, and independent monetary policy. They explore how the trilemma constrained the SNB's decision, the consequences for Swiss exporters and savers, and how other countries like China and the Eurozone navigate these trade-offs today. A focused look at a core concept that shapes every central…