February 14, 2008
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Treasurer Anna Escobedo Cabral
Welcome Remarks at the Workshop on Financial Inclusion in the Americas

Washington - Good morning. Thank you for being here. I'm extremely pleased to welcome you to Treasury's historic Cash Room – a room where cash was once produced, counted and stored. I'm also very pleased and honored that Secretary Carstens could join us today. On behalf of Secretary Paulson, I'd like to thank Secretary Carstens for your strong partnership.

I also want to thank the government representatives from Guatemala, Honduras and El Salvador for being here. Secretary Paulson regrets not being able to join us this morning. Promoting economic growth, fighting poverty and income inequality and expanding infrastructure and investment throughout Latin America remain priorities for President Bush and Secretary Paulson.

In fact, this workshop is part of a broad Treasury priority to advance financial inclusion. Your participation here today underscores the important role financial inclusion plays in expanding opportunity and economic development throughout the world.

Inclusion in the financial mainstream is essential for a country's long-term economic growth and financial stability. In many Latin American countries, up to 70% of the population functions entirely outside of the financial system. By providing households with the opportunity to safely save, borrow, and invest, we can empower individuals with the ability to take advantage of economic opportunities and build financial security.

Countries have struggled with this issue for decades. In fact, we face the same challenge in the U.S. where an estimated 10 million residents do not participate in the financial mainstream. We know there are many reasons why these individuals are unbanked – some face language or cultural barriers, some live in rural areas with no convenient access to financial institutions, and some simply have never had a relationship with a financial institution.

To be sure, the unbanked population is diverse, and a diversity of financial products and services are required in order to meet their unique needs. This requires innovation, creativity, and most importantly cooperation across a range of sectors.

The high cost of establishing and maintaining vast brick and mortar branch networks has been one of the biggest hurdles to expanding access. Advances in technology now make it possible to reach even the most isolated communities with high quality, low cost financial services. But we all have a role to play. Governments must work to foster a sound and effective regulatory environment that gives the private sector the opportunity to put innovation to work.

What we've found in the United States, and quite frankly, in other countries we've worked with, is that our efforts to advance financial inclusion are only as strong as the partnerships we can create with each other. Over the next day and a half, we'll explore the challenges that hinder participation in the financial mainstream, and we'll learn about a variety of business models and partnerships that are helping to break through these obstacles.

We'll also discuss strategies to meet the diverse needs of underserved communities, and ways that we can empower consumers to make the most of the financial opportunities available to them. This is critical when we talk about remittances – an issue of great importance to all of the countries here. Remittances can have a potentially meaningful impact if we can help those receiving this money to build their assets and invest wisely.

Unfortunately, a majority of remittance senders and recipients are unbanked – which means a percentage of their money is being spent on transfer fees that contribute to large transaction costs. If we can help channel remittance money through the formal financial system, remittances have the potential to become a driving force for economic growth through savings and investment.

Micro, small, and medium enterprises have the potential to be the powerhouses of our economies, but many entrepreneurs are intimidated by formal bank settings and requirements for opening accounts. Instead these entrepreneurs turn to informal lenders which increase their cost of doing business. Opening the formal system to these business owners will make them more competitive and increase their opportunities for growth.

Throughout this workshop, we aim to address a broad set of issues in a short amount of time. But these issues are important because at the end of the day – for every country represented here – getting more people involved in the mainstream financial sector is about investing in our communities. Financial inclusion is a step toward economic mobility. It's the work of every one of us here today to find creative ways to offer a bridge into the formal financial sector.

I look forward to a meaningful exchange of ideas and solutions throughout this workshop. This is meant to be a discussion, so I encourage everyone to share your thoughts. By tomorrow afternoon, we will leave with at the very least a room full of very strong and valuable partners, and I'm confident that our work together will ensure that more people experience the benefits of the region's growing prosperity.

Again, thank you for being here, and now I'm pleased our keynote speaker. Agustín Carstens assumed office as Secretary of Finance and Public Credit of Mexico on December 1, 2006 with the new government of President Felipe Calderón. Prior to taking up his current position he was Deputy Managing Director of the International Monetary Fund. Mr. Carstens has a Ph.D. and an M.A. in Economics from the University of Chicago. He has a B.A. in Economics from el Instituto Tecnológico Autónomo de México. He brings to his position expertise gained from a career at the Banco de México among other notable positions.

Secretary Carstens is a leader in the region and a strong partner to us at Treasury. I'm pleased to introduce Secretary Agustín Carstens. Thank you.

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