Mechanisms to Promote Financial Inclusion

Conditioned Monetary Transfers (CTM) are monetary subsidies given by governments to vulnerable families so that they can adopt certain behavior patterns that improve their life conditions, opportunities, and social capital, as for example, children school attendance and nutritional and health controls, among others.

The CTM programs have a natural association with the financial sector as most of the payments of these subsidies are done through pre-paid electronic cards, or transfers to savings accounts.

In past years, CTM initiatives have become an opportunity to promote financial inclusion. However, the delivery of money with the intermediation of a bank, the use of pre-paid cards, or opening savings account does not imply a financial inclusion processper se. In order for financial inclusion to be effective and have an impact on the financial well-being of people, it must make an effective use of financial services.

The population's low level of financial education, the lack of knowledge regarding financial products and services, and the low level of trust in financial institutions are barriers that limit access and reduce the possibilities of a more effective financial inclusion. For this reason, some CTM initiatives have incorporated complementary programs of financial education to promote the effectiveness of CTM programs and the efficient use of financial services.

The available results suggest that the programs have been satisfactory. In the future, financial education programs associated to CTM programs could expand to cover most of the beneficiaries, reaching a large part of the region's population. However, the design and implementation of national programs and initiatives could benefits from the instruments and most relevant international best practices.

On the basis of successful initiatives existing in the region, financial education could strengthen even further by developing policies and programs based on empiric evidence, thanks to the development of base line surveys and impact evaluations, as well as through the development of strategic alliances, both at a national and regional level.