A central result in open economy macroeconomics, first clarified by Mundell and Fleming, is that a country cannot simultaneously opt for 

1) open financial markets (Free Capital Mobility)

2) fixed exchange rates (Peg)

3) effective monetary policy (Monetary Autonomy)

Rather, the country is constrained to choosing two of these three.  The Impossible Trinity is also sometimes called the "Trilemma" since it is a choice among three favourable options, only two of which are possible at the same time.   

In the real world policy this simply means "a country must pick two out of three. It can fix its exchange rate without emasculating its central bank, but only by maintaining controls on capital flows (like China today); it can leave capital movement free but retain monetary autonomy, but only by letting the exchange rate fluctuate (like Britain or Canada); or it can choose to leave capital free and stabilize the currency, but only by abandoning any ability to adjust interest rates to fight inflation or recession (like [the currency board regimes in Hong Kong today or Argentina in the 1990s]). Source