The market and the costs of remittances

Recorded remittances flows out of Germany reached Euro 3.18 billion in 2004.

Promote agreements between financial institutions of sending and receiving countries.

Remittances.

They should also adopt specific policies to affect volumes of remittances, remittance transfer mechanisms, management of remittance funds, the use of remittances and diaspora contributions to development.

Facilitation and reduction of the cost of transfer of migrant remittances

The use of banks and other financial institutions by receivers and senders of remittances would also contribute to the reduction of transfer costs.

60 206. Facilitation and reduction of the cost of transfer of migrant remittances

Facilitation and reduction of the cost of transfer of migrant remittances

Regulate informal value transfer systems, such as hawalas.

In some countries, the mechanisms available in the market for the transfer of remittances have experienced great changes over the past few years.

Fostering the channelling of remittances through financial institutions ( bancarization').

When your money order comes, or you can send it, whatever.

The purpose of fostering the bancarization' of remittances would also contribute to the provision of integrated services to senders and receivers of remittances, such as savings accounts, credits and mortgages (microfinance).

Using a credit card, the Brazilian worker can send up to US 10,000 in remittances at very low costs.

The provision of technical assistance to small financial institutions in remittances' recipient countries therefore reducing transfer costs becomes highly relevant too, as it can encourage voluntary agreements between financial institutions in receiving and sender countries.

It is important to mention, however, that since a considerable share of remittances is not channeled through formal venues, official statistics underestimate the actual scope and amount of remittances.

Transfers and remittances

Reducing the costs of remittances

Developing countries are the main beneficiaries of remittances, accounting for 65 of all inflows.

Statistics on remittances provided by recipient countries are not comparable so far due to a lack of harmonisation of Central Banks regulations.

Any difference between the actual amount(s) received on exchange and the amount(s) that would have been obtained at the operational rate(s) of exchange shall be accounted for as loss or gain on exchange.

Alternative remittance systems

Capital flows and remittances

4310 Prohibition of foreign exchange allocation

Improvements in market competition, technologic standards and transparency have resulted in a considerable drop in the costs of remittances' transfer.

Please indicate the laws and procedures available to regulate alternative remittance systems, including systems of, or similar to, the kind known as hawala.

Working groups including private and public institutions could be created both in recipient and sender countries in order to collaborate in the identification of obstacles to remittances flows and ways to remove them.

Developing countries are the main beneficiaries of remittances, accounting for 65 of all inflows.

All foreign exchange remittances must be conducted through the Royal Monetary Authority.

Initiatives were also needed to improve remittance services to migrants and reduce transfer costs.

Table A shows the analysis of the currency exchange credit.

Table B shows the analysis of the currency exchange credit.

In order to maximise the impact remittances have on the economic activity of the recipient country (the multiplier effect'), the development of new financial instruments, such as loans backed on remittances, might have positive results.

The international community should develop mechanisms to register money transfer services in order to prevent the misuse of informal money transfer systems such as hawala system.

a Private flows include those identified as workers' remittances and other private remittances .

There are no alternate remittance systems.

Remittances from emigrant workers constituted a major source of additional income for their families and a reliable source of foreign exchange for the destination countries.

The impact of remittance income on household well being depends on who controls remittance income and how it is spent.

In Bangladesh, remittances were equivalent to 40 per cent of export earnings in Pakistan and Sri Lanka, they were equivalent to more than 25 per cent of export earnings and in the Philippines, they were equivalent to 25 per cent of export earnings.

Remittances from migrant workers continued to increase and largely exceeded official development assistance in some countries, they were the largest source of foreign exchange.

However, there is widespread consensus on the fact that fees charged on the transfer of remittances are still very high and surpass by far the real costs incurred by the companies that provide the service.

The very high costs associated with the transfer of remittances stem from the inefficiencies in the market and the regulatory framework in which agents operate.

The Team makes no distinction between alternative and informal remittance systems for the purposes of this report.

SR VII. Wire transfers