Neither Libra’s promoters nor central bankers are wrong. With smartphone penetration having long outpaced bank account ownership in many countries, digital wallets offer greater promise for bringing people into the mainstream financial system than analog approaches such as postal banking or a Canada‐​style public mandate. But to appeal to unbanked households, digital wallets must address the reasons why the unbanked are so. Ubiquity and minimal fees are important — as CBDC proponents suggest in making their case — but so are privacy, reputation, and simple interfaces that help customers understand their financial position and solve their questions and complaints without jargon or bureaucracy.

America’s financial inclusion problem is usually expressed as the percentage of households — 5.4 percent at last count, according to the Federal Deposit Insurance Corporation (FDIC 2020: 1) — who lack a bank account. This percentage is considerably higher than those of other rich countries, such as Britain, Canada, and Germany, where account ownership is near universal. The absolute number of unbanked U.S. households is staggering, at 7.1 million, and while the FDIC’s biennial surveys chart an encouraging trend of decline since 2011, the pace of that decline is unsatisfying to many people, myself included.

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But I am also unhappy with the conventional definition of financial inclusion. It assumes that, were someone to open an account on behalf of each unbanked household, the problem would be solved. Some experts whose commitment to help the unbanked I do not doubt advocate just that: a mandate for the Federal Reserve to create retail deposit accounts — “FedAccounts” — on demand (Ricks, Crawford, and Menand 2021). But I think the merits of this intervention as a financial inclusion policy are questionable, as there is no assurance that the unbanked want such accounts.

When the FDIC last asked the unbanked why they are so, just over a third cited minimum balance requirements and high fees as the main reason. If “FedAccounts” carried no such fees, one might expect these households to welcome them and move from cash to electronic money. But that leaves two‐​thirds of the unbanked who might still eschew FedAccounts. Why? Because their chief reasons for being unbanked did not involve cost but privacy, trust, and the lack of a credit history or adequate documentation to open an account. Besides, 56 percent of the unbanked told the FDIC that they are “not at all interested” in having a bank account.

Two reasons come to mind for why so many unbanked would rather remain so than get a conventional bank account. The first is that financial services providers often described as “non‐​mainstream” — check cashers, pawnbrokers, payday lenders — serve the unbanked better than many of us think. They have convenient locations that are open most of the time, their fees are transparent if high, and the people who work there look like the unbanked: young, minority, immigrant, often Spanish speaking. The second reason is that bank accounts have become commoditized, their offerings indistinguishable from each other, and innovation minimal in comparison with other consumer financial products. Given the available alternatives, bank accounts just do not appeal to a majority of the unbanked.

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The challenge of financial inclusion policy is to encourage the growth of bank account substitutes that do appeal to the unbanked. With that in mind, the definition of financial inclusion that I would propose is “access to deposit, credit, and payment options that meet consumers’ diverse needs and reflect their varied economic circumstances and life plans.” Only by taking account of the specific needs of unbanked consumers, and how these needs might change as they grow older and more affluent, can policymakers help to change the regulatory environment to better serve the unbanked. I believe digital currencies belong in the solution set.