Workers'remittances to developing countries : a survey with central banks on selected public policy issues
AbstractThis paper presents the findings of a survey conducted by the World Bank of central banks in 40 developing countries across different regions in the world. The survey focused on the following topics: (1) coverage of national statistics on remittances, (2) cost of transferring and delivering remittances, (3) regulatory regime for remittance transactions, and (4) efforts of developing countries to channel remittance flows through formal financial institutions. The study finds that in most countries existing data do not reflect the full amount of remittance inflows that they receive every year. Coverage of instruments and financial institutions through which remittances take place is limited. Moreover, only a few countries measure remittances that take place through informal channels. It also finds that the scope of financial authorities in developing countries to reduce remittance fees is limited because a large part of the fees charged to customers are set by financial institutions located in the countries where transactions originate. Cooperation between sending and recipient countries is needed to reduce remittance costs. The survey finds that in several countries money transfer companies are not properly supervised. Given the increasing international concerns with money laundering and terrorism financing issues, it is important that basic registration and reporting requirements are introduced for money transfer companies. Registration and reporting requirements should be designed in such a way that they do not deter the further development of this type of financial institution. Finally, the survey finds that most countries need to establish better mechanisms that would allow them to maximize the developmental effect of remittance inflows. By establishing new savings and investment instruments for remittance recipient households, a larger part of remittance flows might be channeled to finance productive investments, thus fostering economic growth.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 3638.
Date of creation: 01 Jun 2005
Date of revision:
Banks&Banking Reform; Financial Intermediation; Economic Conditions and Volatility; Economic Theory&Research; Macroeconomic Management;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-12-14 (All new papers)
- NEP-CBA-2005-12-14 (Central Banking)
- NEP-DEV-2005-12-14 (Development)
- NEP-MAC-2005-12-14 (Macroeconomics)
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- Ambrosius, Christian, 2011. "Are Remittances a 'Catalyst' for Financial Access? Evidence from Mexico," Proceedings of the German Development Economics Conference, Berlin 2011 5, Verein für Socialpolitik, Research Committee Development Economics.
- M. Hadzi-Vaskov, 2006. "Workersâ€™ remittances and international risk-sharing," Working Papers 06-19, Utrecht School of Economics.
- Freund, Caroline & Spatafora, Nikola, 2005. "Remittances : transaction costs, determinants, and informal flows," Policy Research Working Paper Series 3704, The World Bank.
- Robert Shelburne & Jose Palacin, 2007. "Remittances in the CIS: Their Economic Implications and a New Estimation Procedure," ECE Discussion Papers Series 2007_5, UNECE.
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