I was in Vienna last week to attend an impressive event called the Public-Private Partnership on Remittances, organized by my colleagues Massimo Cirasino and Peer Stein. Amid the technocratic, technical, and tactical treatise on payment systems, a high point for me was the launch of Remittance Prices Worldwide, a new World Bank remittance price database.
For the first time there is one database, painstakingly gathered and meticulously organized with the lay user in mind, dedicated to the cost of sending remittances in over 120 important remittance corridors. Transparency is expected to help educate consumers and generate competition among remittance service providers. Indeed a few stats are eye openers: it costs less than $8 to send $200 from Spain to Brazil (less than 4%). By contrast, sending the same amount from Germany to China can cost nearly $50 (or 25%)!
Leaders have been talking about reducing remittance costs since 2004, if not earlier. Yet, until now, there were no real indicators of how costs are falling. Mexico began putting out remittance cost data from about 13 US cities to several Mexican cities, and we saw a 56% decline in remittance costs between 1999 and 2004. The hope is that the new database will have a similar cost reduction effect. That would reduce the drain on poor migrants' incomes and increase their ability to send more help home.
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