U. S. antiterrorism zeal has had a negative effect initiative.
on this front. The U. S. has promoted “know your Support for inclusive finance can stimu-customer” rules that make documentation for late this virtuous cycle at various entry points.
opening accounts excessively burdensome. The First, facilitating the efficient transfer of remit-
U.S. can restore balance by raising “know your tances creates the opportunity for financial
customer” requirements proportionately for institutions to help steer funds sent home
higher-balance accounts. into productive use. At present, according to
Working through multilateral agencies, the ACCION’s internal research, only 27 per cent
U.S. should encourage Latin American govern- of Latin American recipients of remittances
ments to view themselves as facilitators, but are bank customers. Latin American MFIs and
not participants, in the financial sector. The banks should be encouraged to offer savings
principle that credit decisions must be made accounts with low minimum balances as well
without political interference is fundamental. as microenterprise or home loans backed by
Governments should refrain from using the the income provided by remittances. Prepaid
financial sector as a means of financing their cards can reduce the trouble and cost of send-own spending. The legal framework must rec- ing money home and provide an entry point for
Endnotes ognize property rights, and court systems must bank outreach to relatives of workers in the U. S.
1 Council on Foreign Rela- uphold secured transactions. Most important, The U.S. can smooth the way to broader finan-
tions Task Force on broad access to financial services should be a cial access, again, by easing its enforcement
U.S.-Latin America Rela- tions. U.S-Latin America core goal of financial sector policy. of stringent “know-your-customer” rules—as
Relations: A New Direction Targeted multilateral aid to MFIs in coun- well as by simply advocating savings-friendly
for a New Reality (Council on Foreign Relations Press, tries with favorable regulatory environments regulations.
2008), 14-15. can help move policy in the right direction. In Inclusive finance programs should also
2 Ibid., 16. many cases, the multilaterals can strengthen focus on guest workers or long-term migrants
3 Luis Alberto Moreno, the market by working with the private sec- to the U. S. who return to their countries. USAID
“Challenges to Expand
Access to Banking and tor in countries where the regulatory environ- and multilateral/institutional technical assis-
Credit Services,” speech at ment allows it. The new administration should tance and capacity-building programs should
Forty-first Banking Conven-
10-11, 2006, encourage Congress to simplify the procure- encourage MFIs and other financial institu-
Cartagena de Indias, ment process for programs such as USAID, free- tions to target the returnees, who have often
Colombia, available at
< http://www.iadb.org/ ing the agencies to work directly with NGOs developed significant financial and personal
NEWS/ articledetail.cfm?lan and financial service providers located in the resources, equipping them to start businesses
&ART T YPE=SP> (accessed recipient countries. USAID programs should or invest in their home countries.
14, 2008). empower these local organizations to design In the twenty-first-century struggle to rap-
4 Richard Lapper and Amy and implement programs that provide financial idly reduce and ultimately eliminate poverty,
Yee, “Lifeline for millions is
a valuable asset class,” services to the poor. inclusive finance is emerging as more than just
The Financial Times, Market research shows that most Latin another arrow in the quiver. Creating condi-
November 15, 2007.
5 Council on Foreign Rela- American immigrants come to the U. S. with tions under which the poor can profit from the
tions Task Force on specific financial goals and the intention to financial sector and be trained to make pru-
U.S.-Latin America Rela- tions,
4. return home. In fact, there is a natural relation dent and productive use of financial services is
between microfinance and guest workers engag- one of the
fundamental.challenges of poverty ing in such circular migration, and ACCION is alleviation. Those challenges should serve as a lready working in Honduras on just such an linchpin of U.S. policy.
The next U.S. administration should concentrate on the real
elimination of poverty—a plague that breeds
narcotrafficking, corrupt politics and other challenges.—Ewa