Economic development, according to the Inter-American Development Bank (IDB), is for people—for citizens. If the benefits of economic growth fail to reach a majority, in the long run there can be no development. Over the past 3 years, Latin America has enjoyed its strongest cycle of economic growth in nearly 30 years. Remarkably, this expansion has been accompanied by low inflation, falling fiscal deficits, and current-account surpluses, and it has occurred amid the most active electoral calendar in the region’s recent history. But conditions for the majority of Latin Americans have not improved substantially. The region’s per capita income has barely doubled over the past 45 years, whereas in South Korea it has increased 15-fold. Poverty and inequality ratios have been stagnant in Latin America, and a large proportion of our people still await the promised fruits of progress.Going forward, we need to focus our attention on expanding opportunities at the base of the economic pyramid, which represents a large majority of Latin Americans. Few areas will be more important in this effort than building deeper, more inclusive financial markets. In brief, financial development enables individuals to make the most of their potential and represents a tool for expanding “financial democracy.” In Latin America, we have made historic strides toward the consolidation of political democracy, but they have not been accompanied by the democratization of means and opportunities. Financial democracy is fundamental for achieving greater inclusiveness, improving social cohesion, and generating broad-based growth. It is therefore crucial for economic dynamism and political stability. Belonging means having something to lose, and this sense is fundamental to social cohesion.In Latin America, banks are the leading source of financial services. Despite the banks’ importance in business financing, the amount of credit extended to the private The IDB recently conducted a detailed study of the region’s financial markets. We found that large numbers of people have no access to financial services. On average, only 10 percent of the population has access to credit; access to other services, such as insurance and the capital markets, is lower still. (Even in the United States, more than 40 million people do not have access to financial services.)Moreover, financial institutions, aiming to maximize profits, seek economies of scale and scope and are therefore interested mostly in large urban markets and in large clients. Coverage is limited in more sparsely populated areas, such as the rural sector, and among low-income groups.By contrast, in the United States, the Supreme Court’s 1978 ruling against limits on rates helped fuel a boom in the credit card market, which today has assets of $452 billion and benefits 60 million families. But this phenomenon is not limited solely to wealthy nations. In Colombia, for example, thanks to reduced inflation and increased competition, financial spreads have narrowed, and the sector is enjoying an unprecedented boom. Nonetheless, to guarantee its sustainability, competition must be fostered still further. Foreign banks hold only 20 to 25 percent of the Colombian system’s assets. The proportion is 40 percent in Chile, 45 percent in Venezuela, 60 percent in Peru, and 80 percent in Mexico.Over the past two years, the banking system’s liquidity has increased significantly in Latin America, but only Brazil and Chile have regained the levels of lending to the private sector that prevailed in the 1960s. In Argentina and Venezuela, levels of credit to the private sector are one-fourth to one-fifth of what would be justified by their overall levels of economic activity. Only in Chile is lending to the private sector at a level greater than the country’s GDP would warrant. Lend-ing to governments and to large customers not only is easier and more profitable but also requires less capital. This state of affairs is promoted by banking regulations that give preference to stability over intermediation. It is not sustainable, however. If the banks fail to deepen and extend their coverage, technological progress will provide increased opportunities for fund transfers and intermediation outside of the banking infrastructure.are much lower than those for payments using credit cards or checks, which do not reach lower-income groups. These are the channels of the future for the remittances of migrants.The reality of low bank account use, low inclusion, and low capital markets development in Latin America needs to change radically not only for the good of the region but also for the stability and long-term profitability of its financial systems. This goal requires concerted action by the public and private sectors.