World Bank examines system of remittances to Caribbean
published: Wednesday March 15, 2006
WASHINGTON (CMC):
THE WORLD Bank and the Bank for International Settlements have collaborated in providing for the first time, a report on understanding the payment system aspects of remittances to the Caribbean and other countries.
The banks said while, in recent years, a number of reports have been prepared by various organisations on sending remittances back home, few have been devoted specifically to the payment system aspects or the practical realities of how the money is transferred.
In its report, released Monday, the banks provide an analysis of these payment system aspects, and set out general principles designed to assist countries that want to improve the market for remittance services.
FIVE PRINCIPLES
The report contains five general principles covering transparency and consumer protection; payment system infrastructure; the legal and regulatory framework; market structure and competition; and governance and risk management.
It also highlights the roles of authorities and remittance service providers in the application of the general principles.
The banks say that the flow of funds from immigrants back to their families is an important source of income in many developing economies, such as those in the region.
The total value of these remittances has been increasing steadily over the past decade, the banks say, estimating that in 2005 the total value worldwide was over $230 billion.
The Inter-American Development Bank (IDB) estimates that Caribbean and Latin American nationals sent home about $55 billion last year.
The IDB said these flows were a major source of capital for several countries in the Caribbean and Latin America. Haiti, the poorest country in the Americas, received just over $1 billion from its expatriates - more than one quarter of its gross domestic product.
Some 25 million Caribbean-born adults and Latin Americans live and work outside their homelands, mostly in industrialised nations with low birth rates and a growing demand for labour.
NO EASY ACCESS
Last year, about three-quarters of the total volume of remittances to the Caribbean and Latin America came from the United States.
"Sending remittances can be expensive relative to the often low incomes of migrant workers and to the rather small amounts sent - typically no more than a few hundred dollars or its equivalent at a time," the World Bank and the Bank for International Settlements said.
In addition, the banks say it may not be easy for migrants to access remittance services if they do not speak the local language or do not have the necessary documentation.
"The relatively undeveloped financial infrastructure in some countries may make it difficult for recipients to collect the remittances," the banks said.
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