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What central banks say about monitoring and regulating remittance markets

Dilip Ratha's picture

We have just published a working paper reporting on a global survey of central banks on how governments regulate and collect data on cross-border remittance flows.* During 2008-9, we sent questionnaires - an inflow module or an outflow module, depending on whether the country is largely migrant-sending or migrant-receiving - to 176 central banks and other national institutions involved in remittances. 114 institutions responded. 

These responses indicate that:

  • There is a need for more frequent and better coordinated data collection across national institutions, among different divisions within the same national institution, and among countries.
  • Countries should monitor (I mean, try to understand) new channels and technologies in monitoring remittance flows. Authorities should work closely with mobile phone operators to strike the right regulatory balance.
  • The high cost of transfers was cited in the survey as the top factor inhibiting the use of formal channels.
  • Many countries, particularly in Africa, have made progress in avoiding exclusivity contracts, which helps increase competitiveness and reduce transfer costs. But further policy reforms and initiatives are needed.

 

The survey was useful in generating awareness among influential government institutions in sending and receiving countries worldwide. It also resulted in tangible improvement in data reporting in a few major remittance corridors. But I was disappointed in some respects. I would have liked more clarity on AML-CFT regulations and implementation in different parts of the world. These opaque regulations continue to be a major impediment to remittance fee reduction everywhere. Also there was little awareness among central banks about the beneficial links between remittances and financial inclusion.



The findings of the survey underscore the obvious, that a huge agenda of improving data and understanding remittance flows lies ahead for us. At least now we are beginning to know how much we still don't know.

* Read the overview of the paper. The fuller, printed version including the survey questionnaires is available for purchase at http://publications.worldbank.org/ecommerce/catalog/product?item_id=9729038.

See the full content of the paper using the following book widget.

Comments

Submitted by Dilip on
I presented the findings of the global survey of central bank at a meeting of the Global Remittances Working Group (GRWG in short, a successor to the G8 GRWG) on Firday April 23, 2010 on the sidelines of the Bank/Fund Spring Meetings. Please find attached my powerpoint. As I mentioned in my earlier post, the survey cited high costs of remittances as a major inhibiting factor. Further analysis reveals the following factors as contributors to high costs of remittances: - Requiring MTOs to operate in partnership with banks keeps costs high - Compulsory conversion to local currency also associated with high costs In summary, central banks cited that the following areas require attention: - Exclusivity contracts - Surrender requirements - Requiring partnership with banks - Clarification of AML/CFT regulations - Regulation of telecoms, microfinance institutions, post offices - Improving data collection SEE PPT: http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1110315015165/CentralBanksSurvey.pdf

Submitted by Mohan on
Dilip Thanks for sharing the interesting analysis. The cost of transactions deters the frequency of remittances, especially by those who can afford to stagger them. However, for a vast majority of remitters, especially those at the bottom of the pyramid, the transactional cost eats into meager receipts. My two cents on the topic. http://www.globalizationandme.com/2010/02/money-20-and-future-of-money-global.html

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