April 4, 2008
HP-906

Treasurer Anna Escobedo Cabral Remarks
as Prepared for Delivery
at the Inter-American Development Bank Board of Governors Meeting

Miami Beach, Fla.− Thank you, President Mosbacher, for the kind introduction and for your tremendous leadership. OPIC, IDB, and the Department of the Treasury are strong partners. I look forward to our continued efforts in the future.

President Moreno, Don Terry, Sandra Darville, and the entire team at IDB: thank you for organizing this terrific annual meeting in beautiful Miami. I know we are all pleased to join you in your efforts to improve quality of life for those in Latin America, the Caribbean, and across the globe. I am honored to conclude today's seminar.

I would like to thank the distinguished panelists –Elizabeth Littlefield, Rafael Llosa Barrios, Arnaud Ventura, Kurt Koenigsfest, Paul DiLeo, Martin Redrado, Helen Alexander and Fernando Pozo – for joining in today's discussion. I know everyone here today has benefited from your insightful words and ideas. I admire your commitment to IDB and to helping small businesses throughout the Americas gain access to financial services that will help them grow and flourish.

Financial inclusion is a very important issue to me. In February, I hosted a workshop on financial inclusion in the Americas, which was the first of its kind at the Department of the Treasury. I was very pleased that Sandra and Don could attend, as well as representatives from many financial institutions and government agencies in Mexico, Honduras, El Salvador, and the U.S. Out of this workshop came some great discussion – and even greater action. Currently, we have a team in Guatemala on a World Bank Mission working with the government to assess and develop priorities for action. This is the first of many initiatives which will come from the conference.

As you know, inclusion in the financial mainstream is essential for a country's long-term economic growth and financial stability. In many Latin American countries, where up to 70 percent of the population functions entirely outside of the financial system, this is especially important. By providing families 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.

As we wrap up today's activities, I want to leave you with a few broad, final thoughts on the importance on financial inclusion, its challenges, and what the Department of the Treasury is doing to help.

We must have a financial system that works for everyone. Growth and development depend critically on the ability of all residents to use the financial system. Banks cannot simply serve the wealthy. They must also serve those in the middle class – the up and coming, the entrepreneurs, and the innovators – and those at the low end of the spectrum – those struggling to make ends meet. These are the people for whom a dry season could spell destitution, or for whom schooling for their children is out of reach.

We must ensure that a robust financial infrastructure is in place. Secure, effective, and accessible payment systems play a critical role in expanding financial inclusion. Also important is getting people access not just to loans, but to savings, pension funds, and other services. Some studies indicate that one of the greatest, if not the greatest, financial need of the underserved is insurance. The more people active in the mainstream financial sector, the bigger the investment we make in our communities.

Barriers that financially exclude people vary by country. We must address barriers throughout Latin America– improving on physical access, language issues, financial literacy, and lack of trust.

Financial education is a critical part of financial inclusion. Here in the U.S., we struggle with financial education issues. The President has formed a Council to address these issues for students, workers, and families in our country. It is vital that people not only need access to services, but must understand how to use those services. Without this knowledge, these folks can become the victims of financial abuse and predatory practices. We unfortunately saw this play out in some cases in the U.S. housing industry. We need to develop and launch effective financial education programs that can reach even our most isolated communities.

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 who 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.

As many of you are aware, Treasury has been deeply involved in financial inclusion and remittance issues for years both at home and abroad. These are very important issues to President Bush and to Secretary Paulson. Over the past year, the Secretary has launched several initiatives with our Latin American counterparts to strengthen the region's economic infrastructure, enhance access to finance and markets, and advance the benefits from trade. He has traveled to Columbia, Guatemala, Peru, Mexico, Brazil, Chile, Uruguay, and Canada to support Treasury's initiatives in these countries.

We know that small business creation is important to decreasing poverty, expanding social mobility, and creating a strong middle class. Last June, to facilitate greater access to finance, Secretary Paulson announced a small business finance initiative. This initiative encourages market-based bank lending to small businesses in Latin America by combining the capabilities of the IDB, OPIC, and the U.S. Treasury. With this initiative, small businesses will get the financial support they need to flourish. I know many Treasury officials will be joining you in the days to come to continue these important discussions, including Secretary Paulson.

At the end of the day, our success in fostering a dynamic and stable economy will depend on our ability to establish an environment in which a competitive, flexible, inclusive, efficient, and resilient financial system can flourish. I hope the meaningful exchange of ideas between the international group of panelists and guests here today will provide a springboard toward those efforts throughout the world. By creating a financial system that works for everyone, and that everyone knows how to use, we can ensure that all people benefit from the Americas growing prosperity.

Thank you.