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Financial Markets
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An efficient financial system – banks and other financial institutions – collects savings and allocates them to the most productive economic activities. A sound financial system is critical to the sustained economic growth necessary to generate the tax revenues needed by governments to fund public services including health care, education, security, clean water and other essential infrastructure. Periodic national and global financial crises have demonstrated the importance of a soundly managed financial system to the national and even global economy, and the dire consequences that can result from failure to provide an adequate enabling environment and regulatory oversight. USAID works to identify and address constraints to the emergence of sound financial systems in developing and transitional economies worldwide. USAID supports host country efforts to develop and strengthen their country’s financial and business environment, often in collaboration with the World Bank, regional development banks and foreign aid agencies of other developed countries. Agency initiatives in this sector include:
- support for rational and predictable legal systems governing activities in the financial sector
- development of collateral registries and credit bureaus that expand access to finance by reducing lending risks
- strengthening of capital markets and use of term lending for housing, plant and equipment;
- development of accounting standards that better enable borrowers to document their debt service capacity to access finance;
- improvements to financial market regulation and supervision; and
- development and strengthening of payment systems that facilitate trade.
USAID partners with the U.S. Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the U.S. Treasury and a wide range of private sector partners to bring the best expertise to bear in assisting countries to strengthen financial sector support of economic growth.
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