when making fundamental decisions about managing international monetary policy a trilemma suggests that countries have three possible options from which to choose according to the mundell fleming trilemma model these options include 
the technicalities of each option conflict because of mutual exclusivity as such mutual exclusivity makes only one side of the trilemma triangle achievable at a given time government considerationsthe challenge for a government s international monetary policy comes in choosing which of these options to pursue and how to manage them generally most countries favor side b of the triangle because they can enjoy the freedom of independent monetary policy and allow the policy to help guide the flow of capital academic influencesthe theory of the policy trilemma is frequently credited to the economists robert mundell and marcus fleming who independently described the relationships among exchange rates capital flows and monetary policy in the 1960s 2 maurice obstfeld who became chief economist at the international monetary fund imf in 2015 presented the model they developed as a trilemma in a 2004 paper 3the french economist h l ne rey argued that the trilemma is not as simple as it appears in the modern day rey believes that the majority of countries are faced with only two options or a dilemma since fixed currency pegs are not usually effective leading to a focus on the relationship between independent monetary policy and free capital flow 4real world examplea real world example of solving these trade offs occurs in the eurozone where countries are closely interconnected by forming the eurozone and using one currency the countries have ultimately opted for side a of the triangle maintaining a single currency in effect a one to one peg coupled with the free capital flow following world war ii the wealthy opted for side c under the bretton woods agreement which pegged currencies to the u s dollar but allowed countries to set their own interest rates 5 cross border capital flows were so small that this system held for a couple of decades the exception being mundell s native canada where he gained special insight into the tensions inherent in the bretton woods system 