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In June 2009, Pope Benedict XVI published an encyclical entitled Caritas in Veritate in which he twice mentions microcredit and microfinance. These references may appear surprising since this is the first time they are introduced in a papal encyclical. This paper provides an explanation for the introduction of these two references. Firstly, microfinance has the goal of reducing poverty, which has always been a major concern of the Church, as well as the goal of developing individual actions by way of economic initiative, which recently also became a major preoccupation of the Church. Secondly, microfinance is based on the principles of common good, subsidiarity, and solidarity, three major principles in the Church's social doctrine. Moreover, microfinance is based on the principle of proximity, which is in line with the notion of cultural diversity, which, in turn, is in conformity with the Pope's wishes.