At the opening of the conference RemesAmericas – Remittances for the Future, which is taking place here May 6–7, Moreno cited statistics that point to a change in the declining trend in money sent by Latin American migrants in the United States to their home countries.
Besides the uptick in remittances measured month-to-month in certain countries, Moreno noted that there are signs of improvement in the employment rates of workers of Latin American origin in the United States, one of the principal sources of remittances to this region.
“These signs of stabilization suggest that we have reached a turning point in remittances trends, and that we can now expect a period of single-digit growth in 2010,” he said.
In 2009 Latin America and the Caribbean received some $58.8 billion in remittances, 15 percent less than in 2008, making it the first annual decline registered since the IDB’s Multilateral Investment Fund (MIF) started to track these flows in 2000.
In his welcoming remarks to the forum’s participants, Bank of Mexico Governor Agustín Carstens praised the MIF for its pioneering work on remittances, saying that it had contributed to policies that helped to unleash the development potential of these flows.
Regarding recent remittances trends, Carstens said that while there has been an incipient recovery in the volume and frequency of remittances to countries such as Mexico, “the numbers are still far from the levels reached before the global crisis exploded.”
The current Greek crisis and economic woes in other countries and regions underscore persistent vulnerabilities, he added. “It’s still not a guaranteed fact that there will be a strong recovery of economic dynamism in the world, particularly in the United States, the source of a vast majority of remittances to this continent,” Carstens said.
The region’s central banks have a responsibility to ensure that the fruit of migrants’ efforts are not lost to inflation or macroeconomic instability, he said. Carstens also called for greater efforts to cut the costs of money transfers. “In that sense, we must find the right balance in terms of regulation and oversight to make sure these transactions become less expensive and more secure every day,” he said.
The conference, which has brought together regulators, executives of financial institutions and money transfer firms, and delegates from international agencies interested in migrations and development, was organized by the MIF, an autonomous fund administered by the IDB.
Participants in this event, the first of its kind to be held in Latin America, will discuss the prospects for migrant remittances, which exceed $300 billion a year worldwide.
The conference’s panels will cover issues such as the link between remittances and banking-the-unbanked, leveraging these flows to foster entrepreneurship, using money transfers as a key to housing, insurance, education and healthcare, and deploying new technologies to reduce the cost of wiring money internationally.
The MIF initially started to study remittances to measure their volume and impact in Latin America and the Caribbean. Its research and efforts to promote competition in the market for money transfer services contributed to a dramatic decrease in the costs of making money transfers to Latin America and the Caribbean.
When the MIF began to work in this field a decade ago, the average cost to transfer $200 to this region was 20 percent. Currently, the average cost is about 5.5 percent. This represents an annual savings of around $6 billion for migrants and their families.
The MIF has invested around $75 million in more than 40 remittances-related projects, particularly to encourage microfinance institutions, credit unions and banks to use remittances as a tool to bring more families who receive these transfers into the formal financial system.
The MIF’s remittances program has been the subject of a report on its impact and the lessons learned from 10 years of work.
- Peter Bate