General principles for international remittance services (publication of final report)
23 January 2007
The Committee on Payment and Settlement Systems (CPSS) and the World Bank issued a report today entitled General principles for international remittance services.
The CPSS-World Bank 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 are seeking to improve the market for remittance services. 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. The report also highlights the roles of both public authorities and remittance service providers in implementing the general principles.
Although in recent years a number of reports have been prepared by various organisations on the topic of international remittances, few 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 Marc Hollanders and Massimo Cirasino, 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 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 230 billion 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). Moreover, 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 as regards 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.
Notes to editors
1. A version of the report was first issued in March 2006 as a consultation document.
2. 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 (Head of the Payment System Development Group, World Bank).
3. 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.
4. 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.