The Use of Remittances and Financial Inclusion

Leveraging the economic impact of remittances for sustainable development and financial inclusion

This report provides an overview of the relevant general trends in leveraging remittances as a means to enhance financial inclusion, and it underscores the importance of maximizing the economic impact of remittances towards sustainable development. It describes different migration patterns (domestic vs. international; circular settlement), the segmentation of migrants according to region of destination or origin, and the related behaviors in the utilization of remittance services. It also defines an analytical framework for understanding the instrumental role of remittances as a means to foster financial inclusion. The main issues, policies, and interventions are presented from three perspectives:

  1. A client centric perspective, which explains the specific financial needs of senders and recipients and the constraints they face to access and use financial services.
  2. A supply side and market competition perspective, which highlights the inclusive outreach of different types of remittance service providers (RSPs) in terms of access to remittance and complementary financial services for remittance senders and recipients.
  3. The regulatory framework and market environment, examining the key domain of regulations that affect the provision of remittances by a variety of providers, focusing on the interdependence between domestic payment systems and international remittances.