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The global financial crisis showed that plentiful finance can generate growth that is not necessarily sustainable or socially useful.Well-designed public investment banks are one such solution.As a result, public institutions have traditionally played an important role in providing patient, long-term finance.In many countries, patient finance increasingly comes from public investment banks. These can be national institutions, like Germany's KfW, or multilateral ones such as the European Investment Bank. Because these banks are typically not under pressure to deliver short-term returns, they can provide longer-term financing, place a higher priority on broader social and environmental objectives, and take a different approach to risk and reward than private-sector institutions.Until recently, public investment banks focused mainly on infrastructure investment and countercyclical lending. Second, public investment banks need new monitoring and evaluation frameworks that adequately capture the dynamic spillovers generated by bold, catalytic investments.If correctly structured and governed, public investment banks can be powerful catalysts for investment-led growth.
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