Workers' Remittances to Developing Countries : A Survey with Central Banks on Selected Public Policy Issues

This paper presents the findings of a survey of central banks in 40 developing countries across different regions in the world. The survey focused on the following four topics: (i) coverage of national statistics on remittances, (ii) cost of transferring and delivering remittances, (iii) regulatory regime for remittance transactions, and (iv) efforts of developing countries to channel remittance flows through formal financial institutions. The study found 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 was also found 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 found that in several countries money transfer companies are not properly supervised. Given the increasing international concerns on money laundering and terrorism financing issues, it is important that basic registration and reporting requirements are introduced for this type of company. Registration and reporting requirements should be designed in a way that they do not deter the further development of this type of financial institution. Finally, the survey found 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