In spite of recent progress in the usage of alternative financial services by adult populations, Latin America’s financial inclusion gaps have not reduced, relatively to comparable countries, and, in some cases, have even increased during the period 2011-2014. Institutional weaknesses play the most salient role through direct and indirect effects. Lack of enforcement of the rule of law directly reduces depositors’ incentives to entrust their funds to formal financial institutions. Indirectly, low institutional quality reinforces the adverse effects of insufficient bank competition on financial inclusion.
In the face of growing U.S. indifference to multilateral development institutions, China is stepping up. The circumstances around the creation of the Asian Infrastructure Investment Bank (AIIB) have usefully brought to light a longer trend that will ultimately lead to a diminution of U.S. leadership in the multilateral development system.
Multilateral Development Banking for this Century's Development Challenges: Five Recommendations to Shareholders of the Old and New Multilateral Development Banks
Recognizing the growing global premium on environmental sustainability in a climate-challenged world, we call on member governments of the World Bank to take the first step in that direction by renaming the International Bank for Reconstruction and Development (IBRD) as the International Bank for Reconstruction and Sustainable Development (IBRSD)—and to reshape its mission accordingly, toward leadership on issues of the global commons or global public goods that are squarely in the development domain and require a global shareholder base to respond collectively. Shareholders should in turn look to the regional MDBs to take leadership in supporting the new imperative of sustainable development through country and regional operations across all sectors, but particularly in increasing investment in infrastructure that takes into account the logic of low-carbon and climateresilient economies in the developing world. In line with this approach to differentiated roles within an MDB system, the panel makes five recommendations to better realize the MDB system’s potential for meeting today’s development challenges.