The region of Latin America and the Caribbean is one of the most important receivers of remittances in the world. In 2014, such inflows surpassed 65 billion US dollars and this figure is expected to increase in 2015. In some countries of the region, the inflow of resources from remittances exceeds other income items in the external accounts, such as tourism, foreign direct investment and merchandise exports. There are also countries in the region where remittances reach a high percentage, even higher than 10%, measured as a proportion of GDP. In fact, there are cases like that of Mexico, where they represent a small percentage of GDP, but account for a high proportion of local GDP in some states of the country, providing significant benefits to the thousands of families receiving them.
The topic of remittances is important for Latin American and Caribbean central banks given that practically all of them elaborate their countries' balance of payments statistics and therefore also the remittance inflows item, as well as, where applicable, remittance outflows. These, remittances have a considerable impact on large segments of the population and, in some cases, on the macroeconomic accounts in many countries of the region. As a consequence, remittances represent an important variable for the economic analysis carried out by the region's central banks.
The substantial flow of remittances to the region has favored development of a remittances industry for intermediating such resources. A very wide range of institutions and enterprises participate in said industry and competition in the market has increased significantly, bringing considerable benefits for remittance senders and receivers. In fact, information from the World Bank indicates that Latin America and the Caribbean together with South Asia are the two remittance receiving regions with the lowest costs for such transfers.
In recognition of the importance of remittances for economies of the region, the Center for Latin American Monetary Studies (CEMLA) has paid particular attention to the topic over the last few years. This has included a very wide range of activities that mostly came under the framework of two remittances programs it implemented: Improving Central Bank Reporting and Procedures on Remittances and the Application of General Principles for Latin American and Caribbean Remittance Markets. Both programs received financial support from the Multilateral Investment Fund (MIF), an IDB agency, while the latter also had technical assistance from the World Bank.
The positive performance of these two remittance programs implemented jointly by CEMLA and MIF led to agreement and approval between the two organizations in April 2015 for a new program focused on remittances and financial inclusion.
The considerations above demonstrate how it is of utmost importance for central banks of the region to enhance their knowledge of different aspects of remittances and migrants from the region residing abroad, as well as the impact of such resources on economies, particularly, as regards financial system development and greater financial inclusion of remittance senders and receivers. Thus, in October 2014, CEMLA, with the approval of its Board of Governors, set up the Latin America and Caribbean Forum on Remittances or Remittances Forum, in response to the needs of the region's central banks for obtaining more in depth knowledge of the many aspects (multifaceted nature) of remittance topics.