General principles for international remittance services (publication of consultative report)
13 March 2006
The Committee on Payment and Settlement Systems and the World Bank are today issuing a consultative report on General principles for international remittance services. The report provides an analysis of the payment system aspects of remittances, on the basis of which it sets out general principles designed to assist countries that want to improve the market for remittance services.
The flow of funds from migrant workers back to their families in their home country is an important source of income in many developing economies. The total value of these remittances has been increasing steadily over the past decade and it is estimated that in 2005 the total value worldwide was over USD 230bn equivalent, involving some 175 million migrants.
However, remittances can be expensive relative to the often low incomes of migrant workers and to the rather small amounts sent (typically no more than a few hundred dollars or its equivalent at a time). Also, it may not be easy for migrants to access remittance services if they do not speak the local language or do not have the necessary documentation, while the relatively undeveloped financial infrastructure in some countries may make it difficult for recipients to collect the remittances. In some cases, the services are unreliable, particularly concerning the time taken for the funds to be transferred. In addition, some markets are uncompetitive or have regulatory barriers to the provision of remittance services.
In recent years a number of reports have been prepared by various organisations on the topic of international remittances. However, few of these reports have been devoted specifically to what can be called the "payment system aspects" of remittances - in effect, the practical realities of how the money is transferred. As the co-chairmen of the report state, "understanding these payment system aspects is crucial to understanding remittances and to ensuring that remittance services are safe and efficient".
The report contains five general principles covering transparency and consumer protection; payment system infrastructure; the legal and regulatory framework; market structure and competition; and governance and risk management.
Notes to editors
- The report is being issued now as a consultation document and comments are invited from any interested parties. Comments should be sent to the CPSS (email@example.com) and the World Bank (firstname.lastname@example.org) by 18 August 2006; please mention "remittances" in the subject line of your e-mail. A final version of the report will then be published.
- The report has been prepared for the CPSS and the World Bank by a task force consisting of representatives from international financial institutions and from central banks in both remittance-sending and remittance-receiving countries. The task force was jointly chaired by Marc Hollanders (Head of Secretariat, CPSS) and Massimo Cirasino (Senior Financial Sector Specialist, World Bank).
- The Committee on Payment and Settlement Systems (CPSS) serves as a forum for central banks to monitor and analyse developments in payment and settlement arrangements and to consider related policy issues. The chairman of the CPSS is Timothy F Geithner, President of the Federal Reserve Bank of New York.
- The World Bank supports payment system reforms worldwide and has devoted a significant effort over several years to studying the impact of remittances on poverty reduction and improved access to finance.