community development staff in the 12 reserve banks, their 24 branches, and the board of governors, the federal reserve system is able to monitor and respond to changes in the financial services industry while positively influencing policy that impacts low - and moderate - income consumers. changing demographics our collective work in the realm of financial inclusion is occurring within a landscape for financial services and consumer credit that is changing quickly. racial and ethnic diversification of the country presents opportunities for financial service providers that are attentive to the changing financial needs and preferences of consumers. rising immigration from developing countries, and the associated diversity of experience with formal financial services providers, will challenge the financial services industry to be more flexible and creative in reaching consumers. 11 hogarth, jeanne m. ; marianne a. hilgert, edwin lucio, ana cruz - taura, sibyl howell, jessica leveen - farr, elizabeth, mcquerry, juan sanchez, and wayne smith,. ( 2005 ). “ banking on remittances : increasing market efficiencies for consumers and financial institutions. ” promises and pitfalls – federal reserve system ’ s fourth community affairs research conference, 2005. bis central bankers ’ speeches to return to where we began – with teenagers – those of us that are privileged to share our days with them know how technology is absolutely central to their lives. their familiarity and comfort with online interaction, combined with their expectation of immediate, continuous, and universally accessible service, will likely inspire changes to traditional models of financial service delivery. traditional financial service providers that fail to keep pace with the latest technological innovations risk losing market share to innovators in this area. signs that younger americans are more tenuously attached to the traditional financial system are already apparent and it is important for policymakers to understand the implications of this trend for the financial futures of the next generation. 12 it may, in fact, turn out to be that the innovations in financial services outside the traditional banking system will best address the needs of lower - income americans. however, it is incumbent upon regulators to ensure that these products and services are safe, affordable, transparent, and easy to understand, regardless of the provider. in some cases, regulators may need to ban products that are inherently unfair or deceptive. in all cases, regulators must ensure that consumers are afforded meaningful protections with respect to any products that are offered in the financial marketplace. finally, regulators must also actively monitor the consumer financial market to guard against developments that might threaten the stability of

rely upon and deteriorating credit, many people find it harder to enter, or stay in, the financial mainstream. in analyzing the state of economic and financial inclusion, the crisis both expanded the number of americans excluded from the economy and dramatically raised the barriers to enter it. bricker, jesse ; brian k. bucks, arthur b. kennickell, traci l mach, and kevin b. moore. 2011. “ surveying the aftermath of the storm : changes in family finances from 2007 to 2009 ( 212 kb pdf ) ” finance and economics discussion series 2011 – 17. see fdic national survey of unbanked and underbanked households ; bucks, brian k., arthur b. kennickell, traci l. mach and kevin b. moore. 2009. “ changes in u. s. family finances from 2004 to 2007 : evidence from the survey of consumer finances, ” federal reserve bulletin, v. 95, pp. a1 – a55. see desmond, tyler and charles sprenger. 2007. “ estimating the costs of being unbanked ( 199 kb pdf ) ” federal reserve bank of boston. see fdic study of overdraft fees. bis central bankers ’ speeches why does financial inclusion matter? broad financial inclusion is essential because it bolsters american consumption and savings, which drives macroeconomic growth. in order to promote efficient economic growth and stability, americans must have safe and affordable access to the tools necessary to function in the modern economy. congress created the federal reserve with a view that it should focus on economic growth, so the federal reserve has a clear interest in promoting a meaningful, broad recovery that is conducted in a safe and viable manner. affordable, transparently priced, and safe financial products and services promote positive outcomes for individual consumers, which in turn supports the growth and stability of the overall financial system. from the standpoint of the individual, financial inclusion serves as a mild counterweight to the growing income and asset inequality in the united states that has deepened since the onset of the economic crisis. while the exact level of inequality is a matter of academic debate, the trend across various measures definitely suggests that economic disparity has increased over the past 30 years and has accelerated in the past decade. this phenomenon appears to be driven primarily by the rapid growth in income and assets for those in the top 1 percent of the distribution, while most everyone else has experienced stagnation. 8 this inequality is destabilizing and undermines the ability