WEBVTT

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Microsavings is a hot new idea 
in development economics.

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It addresses a basic problem 
faced by many poor people.

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Let's say you have a small amount 
of money, say, equal in value to $150

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and you want to set up a savings account.

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If you take this money to a large bank,
they'll turn you away

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or maybe they'll even laugh at you.

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The cost of processing the papers, 
setting up the account, and dealing with you

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means it's not worth while for them 
to take care of your very small deposit.

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The results is that a lot of this money
just sits around the homes of poor people

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and it's vulnerable to fire, it's vulnerable to theft.

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In fact, a lot of savings gets destroyed 
by some kind of catastrophe

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or maybe it's taken by 
someone visiting the home.

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And a lot of poor people, in fact, 
would actually be willing to pay money

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to have some opportunity to save 
their money in a secure place.

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The microsavings phenomenon
is evolving through a few different routes.

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Nonprofits for instance are trying 
to set up or encourage opportunities

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for very poor individuals to be able 
to save very small sums of money.

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For instance, the Gate's Foundation 
has been very active in this area.

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Another medium for microsavings has been
actually the cell phone or technology.

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Using cell phones in 
some parts of the world,

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it is possible to save 
and store your money

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and transfer it to other people 
while using electronic technology.

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Finally, banks in many countries 
face burdens and regulations.

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To the extent these regulations
can be moved,

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it will be cheaper 
to supply banking services

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and banks will be more 
interested in serving the poor.

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That too will make microsavings easier.

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Microsavings is, in general, considered 
a very promising idea for the future.

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If you'd like to do 
more reading in the area,

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here is one good paper on the topic.