Dilip Ratha by u8BO3ah

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									The International Remittances Agenda


Dilip Ratha
Development Prospects Group
World Bank




Migration and Development Conference
World Bank, Washington
May 24, 2007
Main messages
 Remittances are the most tangible and least
  controversial link between migration and
  development

 Reducing remittance costs would benefit all retail
  payments

 Remittances can be leveraged for financial access
  of households, and capital market access of
  financial intermediaries

 There is urgent need for clarification of AML/CFT
  regulations
Remittances are large, have continued to
increase
($ billion)                    1995   2006
                                      estimate
Recorded remittances           58     206

ODA                            59     104

FDI                            107    325

Pvt. debt & portfolio equity   126    318
Remittances are large, have continued to
increase
      $ billion
325
                                    FDI

275                                       Private debt
                                          and portfolio
                                          equity
225

175                                       Recorded
                                          Remittances
125

 75                                       ODA


 25

-25




       e
      90
      91
      92
      93
      94
      95
      96
      97
      98
      99
      00
      01
      02
      03
      04

  20 5
      0
    06
 19
   19
   19
   19
   19
   19
   19
   19
   19
   19
   20
   20
   20
   20
   20
   20
Global flows of remittances (US$ billion)
                                                      Change    Change
INFLOWS                         2000   2005   2006e   2005-06   2001-06
All developing countries         85    193     206      7%       115%
 Low-income countries            22     48      55     15%       112%
 Middle-income                   63    145     152      5%       117%

 East Asia and the Pacific       17     45     47       4%       135%
 Europe and Central Asia         13     31     32       3%       146%
 Latin America and the Carib.    20     48     53      10%       121%
 Middle-East and North Africa    13     24     25       4%       67%
 South Asia                      17     36     41      14%       116%
 Sub-Saharan Africa              5      9      9        0%       80%
High income OECD                 46     68     68       0%       36%
World                           132    262    276       5%       88%
                                                      Change    Change
OUTFLOWS                        2000   2005           2004-05   2001-05
All developing countries          12     38            19%       171%
High income OECD                  76    119             7%       43%
High income non-OECD              22     22            10%        0%
World                            110   179             10%       52%
Remittances flows outside LAC continue to
grow
        Year-on-year growth (%)
 60
                                                                          Philippines*




 40


                                                                          Bangladesh
 20



                                                                    Mexico
   0
       Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov- Jan-
        05   05   05   05   05   05   06   06   06   06   06   06   07


Note: Year-on-year growth rate (%) of 3-month moving average
      * from Middle East
   Intra-year seasonality: Monthly remittances to
   Mexico peak in May

Monthly remittances, $ billion
                               Mother’s day
  2



              2007                                                    2006
1.5
                                                                       2005


                                                                       2004
  1




0.5
        Jan    Feb      Mar   Apr   May Jun   Jul   Aug   Sep   Oct   Nov     Dec

      Source: Banxico
Policy implications

   Remittances are private flows
   Fiscal incentives may create distortions
   Not a substitute for official aid
Policy implications
  Reduce remittance costs
  Prudential banking regulations and
  AML/CFT regulations may need
  rebalancing

  Leverage for financial access of
  households

  Leverage for capital market access of
  intermediaries
Policy implications
  Reduce remittance costs
  Prudential banking regulations and
  AML/CFT regulations may need
  rebalancing

  Leverage for financial access of
  households

  Leverage for capital market access of
  intermediaries
Remittance fees are falling, but not fast enough

                                        Remittance flows to Mexico,
30     Fee for sending $300 from                                       25
                                                   $ bn, right scale
       U.S. to Mexico, left-scale
26
                                                                       20
22

18                                                                     15

14                                                                     10
10
                                                                       5
 6

 2                                                                     0
      1999      2000      2001   2002   2003   2004   2005    2006

     Source: Condusef, Mexico
 South-South remittance costs tend to be
 higher than North-South costs
                             Fee and FX commission $

            London-Lagos                                     $29
           Cotonou-Lagos                                           $35

                                                         South-South
        Singapore-Jakarta             $10                North-South
     Kuala Lumpur-Jakarta               $12
     Jakarta-Kuala Lumpur                                $27


   Los Angeles-Mexico City               $13
Guatemala City-Mexico City                         $23
Mexico City-Guatemala City                             $24
Policy implications
  Reduce remittance costs
  Prudential banking regulations and
  AML/CFT regulations may need
  rebalancing

  Leverage for financial access of
  households

  Leverage for capital market access of
  intermediaries
           Migration           Remittances




Remittances are the most tangible – and non-controversial -
link between migration and development
               1. Monitoring,
                analysis, projection




3. Financial                  4. Capital
 access         International market access
                 Remittances
                  Agenda



               2. Retail payment
                systems
                              1. Monitoring, analysis, projection
                              - Size, corridors, channels
                              - Counter-cyclicality
                              - Effects on poverty, education, health,
                                investmen
                              - Policy (costs, competition, exchange
                                controls)


3. Financial access
                                                        4. Capital market access
- Deposit and saving products      International        - Private banks and
- Loan products (mortgages,
                                                          corporations
  consumer loans,                   Remittances           (securitization)
  microfinance)
- Credit history for MFI clients
                                      Agenda            - Governments (diaspora
                                                          bonds)
- Insurance products
                                                        - Sovereign credit rating

                            2. Retail payment systems
                            - Payment platforms/instruments
                            - Regulation (clearing and settlement, capital
                              adequacy, exchange controls, disclosure, cross-
                              border arbitration)
                            - Anti-money laundering/Countering financing of
                              terrorism (AML/CFT)
            Latest data available at




www.worldbank.org/prospects/migrationandremittances

								
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