NEWS WIRE: United States: At International Finance Corporation, Muhammad Yunus Argues Crisis Is Opportunity to Reform Financial System

Source: World Bank Crisis Talk Blog.

WASHINGTON, August 17 – Muhammad Yunus was in Washington this week to receive the Presidential Medal of Freedom from Barack Obama. He stopped by the World Bank on Friday to give a talk at the IFC which addressed, among other things, the financial crisis. (His own Grameen Bank has not been affected by the crisis).

Yunus argued that the current crisis is actually an amalgam of many crises which came to a head in 2008: finance, food, energy, environmental (ongoing) and social (income, poverty, health; also ongoing). He believes that the crisis offers a tremendous opportunity to change the modern financial system, and warns against trying to re-implement the old system.

Yunus has two main priorities for changing the system:

Fix finance in order to become more inclusive. The old financial order catered to an exclusive section of humanity. Yunus wants everyone to have a place in the system, which, incidentally, is the premise behind microcredit.
Change the concept of business in order to achieve a higher social impact. Yunus wants to develop a second order of businesses which are driven by creating positive externalities such as job creation, public health and poverty reduction, rather than cash profits. These social businesses would work in conjunction with the traditional profit-motivated enterprises.
Yunus considers microcredit lenders to fall into his social business framework, dismissing the idea of making profit-motivated investments in microfinance. This might not have been an easy sell at the IFC, since one of the criteria for IFC investments is that it “have good prospects of being profitable.”

But microfinance hasn’t reached a saturation point—perhaps there is room for both approaches?

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