Millions of people around the world are financially excluded. These individuals, mainly women and poor people, suffer financial exclusion and restricted economic growth. Surprisingly, the financial exclusion of the poor is happening not only in developing countries but in the very financial capital of the world, New York City. Specifically, the New York Times has reported that big banks will reject official New York City municipal ID cards. Thus, these banks are preventing thousands of New Yorkers from obtaining basic banking and financial services.
These restrictions, which are being imposed by the biggest banks to prevent easy access to their services, make Bitcoin more relevant than ever because it can help the unbanked become financially included.
Big Banks Leave Thousands Unbanked In New York City
Millions of people have no access to bank services around the globe. Today, two billion adults remain without bank accounts. In other words, almost 40 percent of adults do not have accounts, according to the World Bank report titled The Global Findex Database 2014: Measuring Financial Inclusion around the World, published in April 2015.
The report highlights the importance of financial inclusion for individuals, stating that:
Financial inclusion has been broadly recognized as critical in reducing poverty and achieving inclusive economic growth. Financial inclusion is not an end in itself, but a means to an end—there is growing evidence that it has substantial benefits for individuals. Studies show that when people participate in the financial system, they are better able to start and expand businesses, invest in education, manage risk, and absorb financial shocks.
Although the World Bank report indicates that some gains have been achieved in the number of people having an account, it emphasizes the fact that “big opportunities remain to increase financial inclusion, especially among women and poor people.”
Unfortunately, opportunities for expanding financial inclusion are being constrained by barriers imposed by the biggest banks in New York City. In effect, as reported by the New York Times’ article Banks Reject New York City IDs, Leaving ‘Unbanked’ on Sidelines, big banks such as JPMorgan Chase, Bank of America, and Citigroup will not accept municipal ID cards as a primary source of identification. These banks are rejecting the cards even though “Last spring, officials from the Federal Reserve, Treasury Department, and Office of the Comptroller of the Currency said that banks could use the New York identification cards known as IDNYC to satisfy certain requirements of the federal anti-money laundering laws,” says the NYT article.
Bitcoin Can Help the Unbanked
Particularly for the poor, banks are expensive due to exorbitant fees, and in many cases inaccessible. In many countries, such as Argentina, Cyprus and Greece, people are especially nervous about putting their money in banks.
Banking history has been plagued with mishaps. In the latest instance, during the 2008-2009 financial crisis, markets collapsed, causing millions to lose their homes, and millions to lose their jobs, producing economic havoc all over the globe.
Today’s economy is rendering the present banking system and fiat currencies obsolete. Banks are intermediaries and, as such, they obstruct or delay the free flow of money. Evidently, the resulting mixture of an archaic institution such as banking and a three-thousand-year-old monetary system is unfit to support the cashless, borderless, democratic, and fast-moving new digital economy.
One of the main problems that foreign workers and poor people face is the lack of identification documentation. Without it, they cannot obtain a bank account or send remittances.
Fortunately, Bitcoin can help. Indeed, there are several startup companies that are offering remittance and other services using bitcoins, such as Wagecan, Abra, Coins.ph, and HappyCoins. For the unbanked, the good news is that to use the services advertised by some of these companies, a bank account is not required. At Paxful, for example, you can buy bitcoins instantaneously, with cash deposits or gift cards, without requiring a bank account or an ID card. And, ANXBTC offers its ANX Bitcoin debit card without an application process and credit checks.
Disclaimer: Bitcoin.com is not associated with any of the Bitcoin companies mentioned above and is not responsible for their products and services.
What are your thoughts on how Bitcoin can help the unbanked? Let us know in the comments below!
Images courtesy of Pixabay, NYC.gov