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has left from countries in Western Europe, such as Spain, as well as fromJapan. In general terms, the sheer volume has become an important sourceof foreign savings that helps address foreign currency reserves.Figure 2: Annual Remittance flows to Latin America and the CaribbeanIn the broader Latin American and Caribbean context, remittances areincreasingly taking on an important share of the national income. Althoughremittances represent only 2 percent of gross domestic product, their impactvaries across countries and regions, and is greater in smaller economies.Remittances are significant for at least five reasons. First, they representan obligation and commitment to family needs. Second, remittancesresult in the distribution of finances to households and sectors of thecountry that tend to be economically disadvantaged. Third, remittanceshave a macroeconomic impact and tend not to decrease with economicdownturns. Consequently, they may offset or stabilize the ups and downsof financial cycles. Fourth, these large financial transfers have the potentialand capacity to generate wealth in the home and the community wherethey are sent. Fifth, remittances have multiplying effects, in part throughfurthering the “five Ts” of global economic integration mentioned above.309