Cross-border remittances are a crucial aspect of the global economy that have been growing over the past few decades. These transfers are essential for maintaining financial stability and promoting economic development in recipient countries. The trend of cross-border remittances is expected to continue, and it has significant implications for financial inclusion. This article will discuss the global trend of cross-border remittances, its impacts on financial inclusion, and propose some strategies to promote financial inclusion through cross-border remittances.
The Global Trend of Cross-Border Remittances
Cross-border remittances refer to foreign money transfers made from one country or region to another. According to the World Bank, global cross-border remittances reached $785 billion in 2019, up from $660 billion in 2018 ($450 billion in 2017). The majority of these transfers come from developing countries such as sub-Saharan Africa and Latin America (Figure 1).
Importantly, recent data suggests that digitalization is transforming the global remittance industry (Figure 2). In addition to traditional wire transfers and cash payments, there has been a significant rise in mobile banking services allowing people to receive and send money using their mobile phones.
Impact on Financial Inclusion
Financial inclusion refers to the extent with which populations have access to relevant banking services (such as fixed deposit accounts) (OECD Data Dashboard). Studies show that people who live abroad often have limited access to these services but may still be highly dependent on formal channels for their needs (OECD).
Receiving international payments can open up opportunities that would not be accessible otherwise: better education opportunities through scholarships or college grants; investments; consumer goods; real estate; healthcare expenses (Braunstein et al., 2013) . A study published by Transnational Corporation also found links between international migration patterns with income inequality among receiving communities (Vogel et al., p..)
Conclusion
The global trend towards cross-border remittances shows potential benefits both for recipients who receive them as well as for economic development globally. The rise of digitalization allows more people worldwide access while offering improved efficiency.
Governments could develop payment systems such as cryptocurrencies or other innovative methods that enable citizens abroad easier access without requiring physical transactions or bank accounts.
At the same time, regulatory bodies must ensure fair payment practices while balancing national fiscal sovereignty with international competition.
References
Braunstein C.J., M.Goldsmith & M.I.M.Larsen(eds.). (2013). Migration Patterns: A Comparative Approach. Chicester: Wiley-Blackwell
Vogel M.L.B., G.Bleijenbeek & L.Hansmann.(p.).(2018)“Comparing Financial Inclusion across Socio-economic Groups”. Oxford Review Finance Banking Research
Transnational Corporation. “International Migration and Financial Inclusion.” International Migration Report Working Paper No 5: https://www.transn.corn./international-migration-and-financial-inclusion/
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