Central Bank operational frameworks can be challenged during times of severe financial stress. Typical of such an instance is where policymakers attempt to heavily manage or fix a domestic exchange rate whilst faced with balance of payments pressures. However, it is claimed to be impossible for policymakers to achieve both monetary independence and exchange rate stability if the domestic economy were to post a balance of payment surplus, otherwise known as the ‘impossible trinity’. The purpose of this paper is to investigate the European Monetary System crisis through the lens of Institutional Practice, that is the day-to-day operations of key institutions, such as the Central Bank, Treasury and commercial banks, with a view to demonstrate why global imbalances are able to occur and persist across the international monetary system. Through both a theoretical and an empirical appraisal, this paper shows how Central Banks in economies with a balance of payments surplus can circumvent the binding constraints of the trinity within their operational frameworks.

中文翻译：

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中央银行能否在其操作框架内规避不可能的三位一体？理论与证据

在严重的金融压力时期，中央银行的操作框架可能会受到挑战。这种情况的典型例子是政策制定者在面临国际收支压力的情况下试图大量管理或固定国内汇率。然而，如果国内经济出现国际收支顺差，即所谓的“不可能的三位一体”，政策制定者就不可能同时实现货币独立和汇率稳定。本文的目的是通过制度实践的视角来研究欧洲货币体系危机，即中央银行、财政部和商业银行等关键机构的日常运作，以证明为什么全球失衡能够在整个国际货币体系中发生并持续存在。