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Ten years ago this month, the French bank BNP Paribas decided to limit investors' access to the money they had deposited in three funds. It was the first loud signal of the financial stress that would, a year later, send the global economy into a tailspin. In the end, the sociopolitical and institutional effects of a crisis can far outlast the economic and financial ones. All of these lessons would have been useful to advanced-economy policymakers ten years ago. When BNP Paribas froze $2.2 billion worth of funds on Aug. 9, 2007, it should have been obvious that more financial stress would be forthcoming. Indeed, advanced-country politicians today still seem to be ignoring the limitations of an economic model that relies excessively on finance to create sustainable, inclusive growth.Consequently, advanced economies took too long returning to pre-crisis GDP levels, and were unable to unleash their considerable growth potential.Policymakers in the advanced world lagged in internalizing the relevant insights from emerging economies.
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