THERE is a debate to be had over when precisely the financial crisis began. But five years ago today, on August 9th 2007, is the strongest candidate. That was when BNP Paribas stopped withdrawals from three investment funds because it could not value their holdings, and in particular their subprime-mortgage assets. “The complete evaporation of liquidity in certain market segments of the US securitisation market has made it impossible to value certain assets fairly regardless of their quality or credit rating,” was the way the French bank put it in a statement issued that day.

BNP was not the first to reach that conclusion. Bear Stearns, one of many names not to have survived the intervening five years, had stopped fund redemptions in July, for example. The increasing difficulties of America’s housing market had been evident for months. But the BNP news prompted the first big policy response from central banks to evaporating liquidity in interbank markets, as the European Central Bank immediately conducted a special refinancing operation…. 

Read More: Economist