This week marks the fifth anniversary of the global financial crisis. Five years ago, the world of finance was shocked when BNP Paribas announced a freeze of three of its money market funds that were undergoing a deadly run of withdrawals. At that moment, a huge pyramid of complex financial assets—then sustained as collateral accepted by banks and the “shadow banking system”—hedge funds and money market funds—started to crumble.
Over the past several decades international trade has expanded dramatically. Today, the volume of world trade is nearly 32 times greater than its level in 1950, and the ratio of merchandise trade to global GDP has increased to more than 50 percent, up from less than 20 percent just half a century earlier.