World Bank Sponsored Database
Rationale for a World Bank Sponsored Database
It is important to note that remittances are, in essence, payments and therefore rely on domestic and international payment systems to flow from the sender to the recipient. Over the last 12+ years, the World Bank's Payment Systems Development Group (PSDG) of the Finance and Markets Global Practice has supported payment systems and remittance reforms in 100+ countries, using several tools, mostly managed under the umbrella of regional initiatives such as the Arab Payments Initiative (API), the Commonwealth of Independent States Payments Initiative (CISPI), the South Asia Payments Initiative (SAPI), the Southern African Development Community (SADC) Payment Systems Project, and the Western Hemisphere Payments and Securities Settlement Forum (WHF).
Specifically in the area of remittances the PSDG has used its experience in payment system development and its role in the international payment system community, to lead an effort, in cooperation with the Committee on Payment and Settlement Systems (CPSS) of the Bank for International Settlements (BIS) to develop the General Principles for International Remittance Services, to address the G-8 request to enhance the efficiency of remittance markets and reduce costs. The General Principles are the internationally agreed standards to address the payment system dimension of remittances. Diagnostics based on these principles are leading directly to technical assistance to support implementation and are being delivered quickly through the standing Regional Payments Initiatives, led by the World Bank. The PSDG also chairs the International Coordination Group of donors and multilaterals that work on improving the business environment for remittance services and leads a Private-Public Sector Partnership to enhance efficiency in the remittance market, as part of the G-8 mandated global effort on remittances.
Remittance Database Objectives
The World Bank's research department has taken the lead in bringing global attention to the phenomenon of remittances, and in producing more and more reliable data on remittance flows on a regular basis. The FPD Financial Integrity program supports the Financial Action Task Force and has pioneered methodologies for studying remittance corridors in order to move remittances into the regulated sector, and is supporting the development of proportionate Anti-Money Laundering-Counter Terrorism Financing policies. The Consultative Group to Assist the Poor (CGAP) has developed tools for micro-finance institutions (MFIs) that are seeking to move into the remittance business, and has co-founded a Remittances Fund and a Technology Fund to promote promising business models.
Most importantly, the World Bank Group's Financial Sector Strategy of March 2007 set as a goal the reduction of remittance costs, and called for the creation of this Remittance Prices Database.
Making Data Comprehensive and Useful
Currently, several independent initiatives seek to gather information on remittance prices in selected corridors. PROFECO's website in Mexico, Send Money Home and Moneymove in the U.K, and national databases in France, the Netherlands, Norway and Germany help consumers choose the best services for their needs. The IDB publishes occasional papers documenting the average prices for countries in the U.S.-LAC corridor. The government of the Philippines also releases occasional information on the cost to remit money home.
However, these programs do not share a unified methodology, do not collect similar data in all cases, and do not have global coverage; thus, the data that comes from them is not directly comparable across countries and regions. For example, data is collected for different base-line remittance amounts, making a direct comparison difficult. It is for this reason that existing data cannot simply be aggregated to form the database.
The World Bank data on remittance prices has been collected anew, using a unified methodology. Nevertheless, the World Bank, through the Private-Public Sector Partnership on Remittances, will seek to work with the managers of other similar databases to encourage inter-operability and joint efforts in the future, for improved global coverage and inter-comparability.
The World Bank's database is designed to monitor the evolution of costs to remitters and beneficiaries of sending and receiving money in major selected corridors. The Bank will oversee the collection of new data to update the site and expand its coverage in the future.
Research and publication of remittance pricing worldwide will serve four important purposes:
- First, updated periodically, this database will provide a benchmark proxy by which to measure improvements in transparency, efficiency, and competition within remittance corridors. Thus, the impact of projects designed to enhance these market characteristics will be measurable.
- Second, a streamlined database will allow for comparisons of markets across countries and regions. Regions/corridors in which markets are working well can be studied and inform reform efforts elsewhere.
- Third, simply the act of publishing this database may serve to reduce remittance transfer prices. Publication of prices in corridors in which they are high can bring government and public pressure to bear on companies to reduce their fees and other charges. An example of this has been the case of Latin America, where publication of remittance pricing was a factor in the reduction of total costs from 15%, on average, in the region in 2000, to 5.6% in 2006.
- Finally, the database may help consumers to better understand their local remittance market and inform their decisions regarding money transfer products. The utility of this function would be improved by increasing the frequency of updates after the first year.