Remittances and Markets: New Players and Practices

The paper analyzes the practice of money transfer by Latin American nationals working in the. It draws attention to the economic and developmental impact of remittances on improving opportunities and conditions in Latin America.

This report focuses on the financial services market, its scope and activities, particularly in relation to the programs that migrant-sending governments create to attract funding from their ex-patriots in the United States. It draws information from two main sources:

• Data in the literature on the marketplace for remittance transfers and on government programs targeting emigrant populations;
• Structured, person-to-person interviews with community leaders of immigrant hometown associations in various cities of the United States.

Further, the report points out:

• Increased competition and appropriate regulations should reduce transfer costs;
• The activities of migrant-sending governments are moving in several new directions, with the support of various levels of government, nongovernmental actors, and U.S. immigrant associations;
• The major advantages offered by new intermediaries are by way of premium service, i.e. immediate delivery of the currency;
• Immigrants choose their supplier on the basis of trust, convenience (including cultural and language similarity), popular demand in the recipient country, and familiarity;
• The most obvious advantage of approaches that leverage remittances is that they create a market for bonds in the banking sector, or help build schools and roads in migrant-recipient communities.