May 14, 2015
CEMLA and FOMIN will promote the development of an enabling environment for the financial inclusion of remittance clients
The Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank (IDB) Group, recently approved a technical cooperation grant of US$1.2 million to complement other US$1.2 million from the Center for Latin American Monetary Studies (CEMLA) for the implementation of a regional project that seek to strengthen the legal and regulatory frameworks of the region's remittance market and to improve the information available on the sector in order to create an enabling environment that will allow central banks, supervisory agencies, and other relevant institutions to increase the number of financial products that meet the needs of people who send and receive remittances.
Each year, more than US$60 billion reaches the Latin American and Caribbean region in the form of international remittances. This flow of money—sent in installments by migrants living primarily in the United States and Spain, and collected in cash for the most part—represents an opportunity for greater financial inclusion of more than 40 million remittance clients.
The approved project will address regulatory and legal barriers such as onerous requirements for opening accounts or maintaining minimum account balances; restrictions on allowing remittances to be deposited directly to bank accounts or electronic wallets; and obstacles to developing low-cost distribution channels, including agent networks and mobile technology applications, among others.
CEMLA and the MIF will also address the lack of disaggregated and up-to-date public information on remittance flows in terms of their source, destination, collection and payment methods, types of institutions participating in the market, and region of origin.
Promoting the financial inclusion of clients who receive remittance transfers through the increased availability of information, and the changes in the regulatory and legal frameworks that grow out of this new project, will all contribute to the work of the MIF's Regional Facility on Remittances and Savings.
The MIF's work in the area of international remittances has been evolving from a focus on reducing costs to a focus on the linkage between remittances and financial inclusion. Millions of remittance senders and receivers are still excluded from the formal financial system, limiting their ability to accumulate assets to reduce their vulnerability and make investments for the future.
About the MIF
The Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank (IDB) Group, supports private sector-led development benefiting low-income populations and the poor—their businesses, their farms, and their households. The aim is to give them tools to boost their incomes: access to markets and the skills to compete in those markets, access to finance, and access to basic services, including green technology. A core MIF mission is to act as a development laboratory—experimenting, pioneering, and taking risks to build and support successful micro, small and medium business models. More information can be found at www.fomin.org
The Center for Latin American Monetary Studies (CEMLA), an association of central banks in Latin America and the Caribbean, was established in September 1952 and currently has 53 member institutions, partners and collaborators, mostly monetary and financial authorities. CEMLA's objectives include: promoting a better understanding of monetary and banking matters in the region, as well as the relevant aspects of fiscal and exchange rate policies; helping to improve the training of personnel in central banks and other financial organizations through training events, meetings of specialists and experts and publications; provide technical assistance, conduct research and systematizing the results obtained in the aforementioned fields; and providing information to members on events of international and regional interest in the areas of monetary and financial policies. More information can be found at www.cemla.org