Managing The Trilemma: The Case of Malaysia

Authors

  • Goh Soo Khoon Centre for Policy Research and International Studies Universiti Sains Malaysia, Malaysia

DOI:

https://doi.org/10.32890/ijms2010.17.2

Keywords:

Impossible trinity, Malaysia, global financial crisis

Abstract

This paper discusses how Malaysia manages the trilemma, the conjecture that a country cannot simultaneously maintain an open capital account, an exchange rate stability, and monetary policy independence. Only two out of these three goals can be mutually consistent and policy makers have to decide which third goal to give up. The paper shows how Malaysia adopts an intermediate regime – a regime that enables policy makers to manage all the three goals simultaneously. The impact of the global financial crisis on the Malaysian economy and the policy options for Malaysia to deal with the recent huge capital outflows are discussed in this paper. The willingness by Bank Negara Malaysia to allow a certain extent of exchange rate adjustments in the face of current global crisis reflects that Malaysia is not exempted from the trilemma.

 

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Published

28-02-2010

Issue

Vol. 17 (2010): International Journal of Management Studies (IJMS) Vol. 17, Special Issue, February 2010

Section

Articles

Research impact

Harvested 2026-09-08
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Identifiers DOI 10.32890/ijms2010.17.2