Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014...

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Dilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability Substantive Informal Session on Private Finance Preparatory Process for the Third International Conference on Financing for Development Remittances and Development

Transcript of Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014...

Page 1: Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability

Dilip RathaThe World Bank

New York, November 13, 2014

Session 1: Exploring nexus between financial sector development, inclusion & stabilitySubstantive Informal Session on Private FinancePreparatory Process for the Third International Conference on Financing for Development

Remittances and Development

Page 2: Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability

Diaspora Financial Resources for Development

Remittances

Diaspora saving

Diaspora giving

Securitization of remittances

Contribution to sovereign credit rating

Page 3: Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability

Remittances

$413 Billion Remittances

$135 Billion Aid

Page 4: Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability

Remittances to developing countries are large ($435 billion in 2014), and more stable

Source: Development Prospects Group, World Bank

-100

0

100

200

300

400

500

600

700

800

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014f 2016f

FDI

Remittances

Private debt & equity

ODA

$ billion

Page 5: Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability

Excluding China, remittances to developing countries are larger than FDI

Source: Development Prospects Group, World Bank

0

50

100

150

200

250

300

350

400

450

500

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014f 2016f

FDI$ billion

Remittances

Page 6: Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability

Remittances

42% of GDPTajikistan

35% of GDPSomalia

$18 bnEgypt

$72 bnIndia

$ billion % of GDP

Page 7: Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability

31%

NepalPoverty rate

42%

1995 2005

Aid that works!

Page 8: Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability

Exorbitant remittances costs

8% 12% 90%Global average Africa Venezuela

20%Within Africa

Page 9: Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability

Reduce remittance cost

1. Relax regulations for small remittances

2. Abolish exclusive partnership with post office

3. Create a non-profit remittance platform

Page 10: Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability

8% (Global average)

$30 Billionannual savings

1%

Reduce remittance cost

Page 11: Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability

Harness the power of diaspora saving and diaspora giving

Page 12: Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability

• Size, corridors, channels• Counter-cyclicality • Effects on poverty, education, health, investment• Policy (costs, competition, exchange controls)

1. Monitoring, analysis, projection

• Payment platforms/instruments• Clearing/settlement, capital adequacy, disclosure, cross-border

arbitration• Anti-money laundering (AML/CFT)

2. Retail payment system

• Deposit and saving products• Mortgage, consumer loans, microfinance• Credit history for MFI clients• Insurance products

3. Financial access for households, SMEs

• Sovereign credit rating• Bonds backed by future remittances as collateral• Diaspora bonds

4. Capital market access for countries,

companies

Global Remittances Agenda

Page 13: Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability

Thank you.

www.worldbank.org/migration

www.knomad.org