We need to fix the leaks in remittance transfer systems around the world

From Global development | The Guardian Fri Feb 8 2013, 07:08:36

Policymakers need to step in to reduce transaction costs on migrant workers' remittances. Massimo Cirasino suggests how

The most visible impact the diaspora has on development comes in the form of remittances - the US $400bn (£254bn) migrant workers sent home to their families in 2012. And every year, that soaring sum keeps breaking records. Food, housing, education, healthcare and more are paid for every day by workers who make their living abroad. But, like a faulty tap, there is a leak in migrant workers' remittances.

Here's where the leakage happens. A large proportion of the money is drained away by the transaction costs of sending money internationally. Given the typically low incomes of migrants and the small amount of each remittance transfer, too much is being spent on these transactions - and too little of the money is reaching migrants' families.

In the same way a plumber would fix a dripping tap, the professionals who work in the global financial system have a responsibility to ensure money is safely transferred from Point A to Point B in every transaction, and that leaks from remittances are fixed.

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