Access to finance for low-income households can improve poor people’s income and overall well being, and in turn spur macroeconomic growth. As International Monetary Fund Chief Christine Lagarde recently said, “inequality is hurting growth.” Realizing this, many central banks in developing countries now aim to use financial inclusion to spur economic growth and address inequality. As a global network of 117 central banks and financial regulators working in 94 developing and emerging countries, the Alliance of Financial Inclusion (AFI), where I serve as executive director, is closely tracking this issue. Fortunately, several developments that we’ve observed bode well for increased financial inclusion and global prosperity:

1. Developing countries are becoming financial innovators, particularly in digital financial services. In nine countries in Africa, more people have access to financial services through mobile technology than through bank accounts. And mobile financial technology is set to expand in coming years.

2. Faced with new technologies and regulatory challenges, financial policy makers are learning from each other more than ever. For example, a Chinese delegation of senior central bank officials recently traveled to Peru to learn about consumer protection and the regulation and supervision of nontraditional financial institutions. This is knowledge-sharing especially important as regulators play a critical role in the modern global market by ensuring consumer protection and encouraging competition.

3. Governments are setting ambitious national targets and implementing strategies for financial inclusion as part of their commitment to the Maya Declaration. The Declaration is the first global, measurable set of goals set by developing and emerging countries to unlock the economic and social potential of the 2.5 billion ‘unbanked’ population. More than ninety countries – representing more than 75 percent of the world’s unbanked population – have supported the Declaration. National targets are set through a bottom-up, consultative approach, which energizes stakeholders and strengthens their commitment to achieve the ambitious goals.

This article originally appeared at Council on Foreign Relations. Please click here to access the full version.

ABOUT THE AUTHOR

Alfred Hannig heads the Alliance for Financial Inclusion (AFI) management unit in Bangkok which implements activities and provides services for members. His responsibilities also include taking an avid role in representing AFI to various stakeholders, and serving as a member of the Steering Committee.