According to the incompatible Trinity: Countries with fixed exchange rates can have both the free movement of capital in and out of the country and domestic monetary policy independence. Countries with domestic monetary policy independence and the free flow of capital in and out of the country must have currencies that float in the FX market. O Countries that permit the free flow of capital in and out of the country must have domestic monetary policy independence. Countries that adopt a floating exchange rate are never able to combat domestic economic weakness