World Bank

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World Bank/CPSS Task Force on General Principles
for International Remittance Systems
by Bob Keppler, The World Bank
World Bank

• Convened September 2004 as a response to the G-8
  Sea Island summit (2004), the G-7 finance
  ministers at Boca Raton (2004), and the
  International Conference on Remittances in London
  (2003).
• Members Central banks of Brazil, Germany, Italy,
  Mexico, the Philippines, Sri Lanka, Turkey, and
  the United States the Arab Monetary Fund, the
  Asian Development Bank, the European Bank for
  Reconstruction and Development, the European
  Central Bank, the Hong Kong Monetary Authority,
  the Inter-American Development Bank, the
  International Monetary Fund, and the World Bank.
• Consultation draft by end of 2005

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World Bank/CPSS Task Force on General Principles
for International Remittance Systems
World Bank

• Chair(s) Massimo Cirasino (World Bank,
  mcirasino_at_worldbank.org), Marc Hollanders (CPSS)
• Secretariat Ole Andreassen (World Bank,
  oandreassen_at_worldbank.org),Isabel Cerqueiro
  (CPSS)
• Mandate To develop general principles on
  remittances that
• describe key features and functions that should
  be satisfied by remittance systems, providers and
  financial intermediaries
• are clear and universally applicable as
  international guidelines and/or standards
• focus on identifying the main characteristics of
  remittance operations and the related
  infrastructures (with a view to improving them).

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World Bank/CPSS Task Force on General Principles
for International Remittance Systems
A dual process
World Bank
Preliminary identification of issues
Nov 04

• Fact finding
• Survey of central banks in 40 countries
• Study of the remittance industry in the Task
  Force member countries

Policy discussion 1.Market environment 2.Consumer
protection and transparency 3.Market
infrastructure 4.Service standards
Jan 05
Apr 05
Introduction The current framework for
remittances Public policy objectives General
principles with implementation recommendations The
responsibility of public authorities The role of
central banks Glossary
Outline
Jul 05
Draft report
Sep 05
Institutional review
Jan 06
Consultations
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World Bank/CPSS Task Force on General Principles
for International Remittance Systems
Categories of Principles
World Bank

• The principles will be divided into four
  categories
• Market EnvironmentExamples Legal basis,
  competitive markets, industry responsiveness,
  formal and flexible market solutions
• Consumer Protection and TransparencyExamples
  Publicly available information, consumer
  awareness, dispute resolution
• Market InfrastructureExamples Availability of
  payment system infrastructure, interoperability,
  access policies, open standards
• Service Operator StandardsExamples Governance,
  fraud protection, cooperation

Examples of corresponding issues related to the
public policy goal increase competition
Market EnvironmentMultiple jurisdictions
require coordination to create a sound legal
basis TransparencyLack of publicly available
and easily accessible information limits the
consumers ability to make an informed
choice InfrastructureProprietary systems limit
the remitters choice of providers because he is
confined to providers with agents close to the
recipient Service Operator StandardsCooperation
between remittance service providers create
network benefits for consumers
) This example is hypothetical and not an actual
part of the Task Forces work
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World Bank/CPSS Task Force on General Principles
for International Remittance Systems
Hypothetical example
World Bank
A Principle Addressing Awareness among
migrants regarding the benefits of financial
inclusion and customer information about the
major features of the industry and their rights
regarding remittance transfers Would
Describe how the end users of remittance
service will only use formal financial
institutions if they trust such institutions and
if they see the benefits of using the formal
sector Only if banks and other financial
institutions understand the cultural factors
contributing to migrants avoidance of the
financial sector, can they respond appropriately
End users need to be kept informed of the
available options and the main characteristics of
the products, so that they can make optimal
choices An informed use of remittance services
can also pave the way for increased access to
other financial and technological services
contribute to the importance of this point. And
Recommend Implementation Actions 1) Improve
trust in financial institutions at both ends,
through market research, pricing analysis, and
communications. 2) Develop the banking system,
through increasing service in underserved areas,
using new technologies, providing fair service
and pricing, and allowing non-bank institutions
engage with remitters. 3) Educate migrants,
through increasing financial literacy, improving
information dissemination, investing in
pre-migration education, and working with
employers in the host countries. ) This
example is hypothetical and not an actual part of
the Task Forces work
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World Bank/CPSS Task Force on General Principles
for International Remittance Systems
Implementation
World Bank

• When the Principles are available, remittance
  systems in main corridors could well be assessed
  against them, and policy recommendations might be
  developed for action by authorities, service
  operators and other stakeholders
• An assessment methodology will be prepared and
  finalized based on the Task Force Report and the
  work already carried out by several institutions
• The World Bank will likely undertake some pilot
  assessments to validate the suitability of the
  assessment methodology (pilots to be undertaken
  early in 2006)
• The World Bank could well support countries who
  wish to implement the resulting recommendations