For Immediate Release
Office of the Press Secretary
January 13, 2004
Fact Sheet
Lowering the Cost of Remittances
Presidential Action
Leaders of the Hemisphere joined President Bush in committing to create
the conditions necessary to reduce by at least 50 percent the cost of
sending money home to family members and local communities by 2008.
Such transfers between our economies, known as remittances, have grown
dramatically over the past decade, yet the fees involved remain high
and constrain the impact of the flows.
The Increasing Importance of Remittances: Remittances, the money
sent by migrants to their families and friends living abroad, have
tripled in the last six years and now total over $32 billion annually
in the Western Hemisphere -- more than four times official development
assistance flows to the region. Remittances represent the largest
source of foreign capital for many of the poorest countries in the
hemisphere and account for more than 10 percent of GDP in six countries
(Nicaragua, Haiti, Guyana, El Salvador, Jamaica and Honduras).
Some 85 percent of the flows to Latin America and the Caribbean
come from within the Hemisphere, including more than three-quarters of
the total, or $25 billion, from the United States alone. These
hard-earned funds go directly to families and communities where they
are used for improving the quality of life of the citizens of the
hemisphere -- paying for school books, purchasing medicine, or starting
a business.
Summit Commitment to Reduce Remittance Costs: Fees associated with
sending remittances remain high, averaging 12.5 percent, or $4 billion
annually. Leaders at the Summit committed to reduce this regional
average cost by at least half by 2008. Leaders committed to
accomplishing this by, as needed or appropriate:
Promoting competition between providers of remittance transfers;
Eliminating regulatory obstacles and other restrictive measures
that affect the cost of sending; and
Adopting new technologies while maintaining effective financial
oversight.
U.S. Action: President Bush is committed to support the region's
efforts to lower remittance costs. To support the Special Summit of
the America's commitment, the U.S. will:
Hold a conference hosted by the Federal Reserve Bank of Atlanta
later this year on establishing regionally compatible electronic
payment systems. The conference will bring together financial sector
leaders and payment system experts to discuss ways to reduce the cost
of transfer, including sharing experiences with automated
clearinghouses (ACH) and other electronic payment systems, and
exploring ways to harmonize payment systems in the region and build
regional electronic payments interchanges.
Provide more than $3 million in assistance over the next two years
to expand access to financial services in Latin America and the
Caribbean. Target countries will include Jamaica, Guatemala,
Nicaragua, Haiti, Mexico, Bolivia, and Colombia.
Promote efficient investment of remittances in local communities.
U.S.-Mexico Partnership for Prosperity: U.S. and Mexico have
already achieved significant success in lowering the cost of
remittances through this innovative program. Bilateral efforts to
promote competition in the market for remittance services and to bring
those without bank accounts into the formal financial system have
produced dramatic results since 1999:
The cost of sending remittances from the United States to Mexico
has fallen by 58 percent.
Remittance flows have grown at a rate of 10% annually.
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