# Are there any notable exceptions to the Impossible Trinity theory?

I am referring to the theory presented on Wikipedia and The Economist that states:

The impossible trinity (also known as the trilemma) is a concept in international economics which states that it is impossible to have all three of the following at the same time: a fixed foreign exchange rate, free capital movement (absence of capital controls), an independent monetary policy

There are several confirmations of this theory presented: The Mexican peso crisis (1994–1995), the 1997 Asian financial crisis (1997–1998), and the Argentinean financial collapse (2001–2002) are often cited as examples.

But are there any examples or indications that this theory is not always true?

The reason why this can be sustained in the short run is that the mechanism of the trilemma is as follows. If a country pursues all 3 policies simultaneously and there is difference between interest rates it is simply unsustainable situation. For example if at home interest rate is $$1\%$$, world interest rate is $$5\%$$ and central bank wants to fix exchange rate between two currencies at parity so one home dollar is equal to 1 foreign dollar $$1H=1F$$, then anyone who has any capital would try to move it to the foreign country. First that capital flight would be disastrously in itself, but then when people move capital abroad they have to go through forex market and this will put pressure on the exchange rate to depreciate, only way how to prevent depreciation and keep exchange rate fixed is for central bank to sell its foreign currency reserves. If the central bank has a lot of foreign currency reserves this can be sustained for quite some time especially if the interest rate abroad is not too different from the one at home, but eventually there will be an end point when the reserves runt out and then having all three policies will be impossible.