# 11-019/2/DSF 7 (2011-01-31)

Dirk Schoenmaker, Duisenberg School of Finance and VU University Amsterdam
Financial Stability, Public Good
JEL codes:
F33, G28, H41

The financial trilemma states that financial stability, financial integration and national financial policies are incompatible. Any two of the three objectives can be combined but not all three; one has to give. This paper develops a model to underpin the financial trilemma. Our findings for financial integration suggest that the financial trilemma is in particular at work in Europe.