Pardee-CFLP-Remittances-TF-Report

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individuals, communities, and families to make choices and ensure that financialintermediation contributes to reversing the “Dutch Disease” vicious cycle,while creating a dynamic whereby remittances are moved out of a cash environmentinto a banking environment that has the ability to leverage financial flowsand services for savings, investments, and productive activities (see Figure 3).Figure 3: Transnational Virtuous Cycle between El Salvador and theUnited StatesSource: Hinojosa-Ojeda and Takash 2011.In exploring why financial exclusion persists and why the banking, mobile,and/or payments industries do not fix the problem themselves, we found that forthese industries to move their business models from a financially exclusive focuson the top of the economic pyramid would be an extremely costly and laborintensive investment not easily remunerated. While they may be interested inthe money to be earned in the bottom of the pyramid (BOP), they would rathersomeone else do the legwork to make this happen. Because of industry inertia,we had to develop of series of mobile and processing technologies and link themtogether, in order to provide banks the ability to offer their services to previouslyunbanked customers.Remittance Flows to Post-Conflict States: Perspectives on Human Security and Development 107
We also learned that to achieve the mission of transnational financial inclusion,it was critical to transform and integrate the financial processors segment of theglobal electronics payments industry. To do this, we had to design and implementa disruptive technological business plan intervention to “capture the commandingheights of the payments industry” and to create the “medicine” for thedisease of financial exclusion, before we could test the impact of the medicinein randomized testing (Banerjee and Duflo 2011). Then we had to come up withrational cost structures that made it affordable and attractive for immigrants inthe U.S. as well as for their unbanked family members in the country of origin.In this way, we were able to show that you can achieve cost reduction, increaseacquisition of new customers, and get the technology into people’s hands. 8Using Technology for Financial Empowerment:Key to the Virtuous CycleEl Salvador has more than a 110 percent rate of mobile penetration and nearlyuniversal coverage throughout the country. At the same time, in the highlyconcentrated U.S. urban migrant communities almost everyone has a personalmobile phone and lives within coverage. Despite this widespread access totechnology, 86 percent of the population in El Salvador does not have a bankaccount; and in Los Angeles, for example, studies have found that between34 and 59 percent of immigrants do not have bank accounts (Demirguc-Kuntand Klapper 2012; Khashadourian and Tom 2007). Widespread access to mobiletechnology, combined with the advances in mobile banking technology overrecent years, thus present a significant opportunity for providing all cell phoneusers with a virtual bank account. This opportunity led years ago to the creationof technology companies that could take advantage of the huge boom in mobiletechnology and translate research recommendations into concrete actions forfinancial empowerment and development from the BOP.In this way, technology has enabled linking the transnational BOP using virtualaccounts linked to prepaid debit and mobile technology in the U.S. to similaraccounts in Mexico and El Salvador that are attached to savings in local financialinstitutions. Using this mechanism, im/migrants and their counterparts inthe country of origin can access much lower cost remittances as well as a widerange of financial services. The critical issue then becomes how to make sure thesavings generated flows into productive investments in the im/migrant-sending8 We were able to reduce international transfer costs by 75% compared to Western Union (Hinojosa-Ojeda,2008).108 A <strong>Pardee</strong> Center Task Force <strong>Report</strong> | October 2013
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Pardee Center TASK FORCE Report oct
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This series of papers, Pardee Cente
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AcknowledgementsThis Task Force on
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ITU International Telecommunication
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networks and migrant associations i
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to developing countries than other
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But most importantly, remittances a
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often mix in the countries of desti
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According to the World Bank estimat
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Because of its focus on the multidi
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eceiving remittances provides an en
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associations for post-conflict inst
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are proposed to avoid the associate
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Terry, D. 2005. Remittances as a De
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oader approach to post-conflict rem
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networks can be seen as “homogeno
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That personalized nature of hawala
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Customary law (xeer) and other trad
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the world (Lindley 2009, 531). Much
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ize the informal equal efforts to a
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struction and development. Means sh
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opportunities should focus on exist
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2. Dodd-Frank Act and Remittances t
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leadership. Formal payments systems
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and financial institutions. 26 Reso
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closures should be both in English
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issued a new proposed regulation De
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“closed network,” in which all
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Some guidance may be found in the p
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the use of mobile devices for money
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Foreign TaxesUnder the 2012 regulat
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Page 66 and 67: Section II: Remittances in Post-Con
Page 68 and 69: Sri Lanka. The conflict also result
Page 70 and 71: Figure 2: Current Account, Trade Ba
Page 72 and 73: flows came from migrant workers in
Page 74 and 75: Informal Remittance Channels in Sri
Page 76 and 77: tory authorities, with some calls f
Page 78 and 79: 4. The Role of Remittances in Post-
Page 80 and 81: Figure 1: Liberia Per Capita Income
Page 82 and 83: associations, women’s groups, alu
Page 84 and 85: Remittances to LiberiaValue of Remi
Page 86 and 87: credit because of the need to be li
Page 88 and 89: Remittance Transfers in Sierra Leon
Page 90 and 91: Knowledge RemittanceThe Liberian di
Page 92 and 93: process furthermore was a pioneerin
Page 94 and 95: Levitt, Peggy and Deepak Lamba-Niev
Page 96 and 97: Section III: Diaspora Networks andC
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Page 100 and 101: One of the main challenges for mobi
Page 102 and 103: 6. Transnational Remittances and De
Page 104 and 105: The Salvadoran Diaspora is very sig
Page 106 and 107: annually during the 1990s to less t
Page 108 and 109: Figure 2: Transnational Vicious Cyc
Page 110 and 111: The transnational vicious cycle not
Page 112 and 113: emittance flows is mixed, as initia
Page 116 and 117: areas. This issue can potentially b
Page 118 and 119: This is a breakthrough moment: afte
Page 120 and 121: Edwards, Sebastian and I. Igal Mage
Page 122 and 123: y La Distribucion Del Ingreso, 1st
Page 124 and 125: 7. Remittances and Community Resili
Page 126 and 127: For quantitative data collection, a
Page 128 and 129: Remittances are perceived as playin
Page 130 and 131: the affected population. Internatio
Page 132 and 133: ReferencesAddleton, J. 1984. The im
Page 134 and 135: 8. Filling the Gap in Health Staffi
Page 136 and 137: The alternative is for donors to se
Page 138 and 139: cians in the U.S. in 2000 (Clemens
Page 141 and 142: 1. Remittances, Financial Inclusion
Page 143 and 144: networks, and communities. The role
Page 145 and 146: • In the present era of heightene
Page 147 and 148: the island of Kosrae, in the Federa
Page 149 and 150: and Sweden and has held visiting pr
Page 151 and 152: he organized a number of workshops
Page 153 and 154: Pardee Center Conference ReportsDev
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