Washington: Nearly two billion people globally do not have bank accounts including those in the US, IMF chief Christine Lagarde said Wednesday, ruing that financial systems around the world despite being sizable exclude many individuals from financial services.
"I resist the temptation of asking you to guess how many people are actually excluded. Two billion people worldwide remain without a bank account; two billion people do not have a bank account.
"Now, there has been improvement, because it's 20 percent less over the last three years, but still two billion is a massive number," the IMF Managing Director said at the Institute for New Economic Thinking Conference on Finance and Society.
She said that financial exclusion is far from being solely a low-income country or an emerging markets issue.
"For example, even here in the United States, surveys find that some eight percent of US households are un-banked, and some 20 percent are under-banked," Lagarde said.
Studies show that broader access to the financial system can boost job creation, increase investment in education, and help people manage risks and absorb financial shocks better, she argued.
An IMF analysis, that will be released later in the autumn, finds that financial inclusion is particularly important, for women, empowering them economically and allowing them to invest in education, which they do a lot more than their male counterparts, she asserted.
Market penetration globally, still on women, a staggering 42 percent of women lack access to basic financial services compared to 35 percent for men.
"This gap is even bigger if one considers the role of women in the provision of financial services," she said.
"Yet desirable as it is, as an objective, financial inclusion is not without risks, particularly if it leads to excessive financial risk-taking.
"Our forthcoming analysis shows that if supported by good regulation, good supervision, and independent supervision, financial inclusion can actually go hand-in-hand with financial stability," Lagarde said.
"So in conclusion, the financial crisis has exposed several fault lines and provided many lessons. An overarching lesson is that building sustainable and inclusive growth hinges on collaborative efforts.
"It requires supervisors and regulators to work on managing risks and to work together. It requires building resilience in all countries. It requires realignment between corporate culture and societal objectives," the IMF Chief said.
