While some countries in the region, including Samoa, enjoy remittances as their largest financial inflows, the International Monetary Fund (I.M.F.) says the cost of sending money back is very high.
Speaking to the Samoa Observer, I.M.F. Small States Division Chief (Asia Pacific Department), Allison Stuart said this is particularly the case for the Pacific where most people are seasonal workers who send money back to their families, when compared to other regions.
Ms. Stuart is attending a three-day conference that brings together regional central bank governors and their delegations, international monetary agencies and development partners to address financial issues of great concern to the region, through greater collaboration.
“The high cost could be partly because the volumes of cash that Pacific Islanders want to send back on a regular basis are quite small amounts, and so there’s a lot of charge for that,” she explained.
“The other reason is that there are not many banks operating in the Pacific, and the small scale may make it a not profitable business for some banks or money transfer operators, also since the global financial crisis, regulations have been tightened around the world, which may have made it more costly for banks to operate in that area.”
Ms. Stuart said the Fintech seminar yesterday provided a platform for the Pacific Islands to dialogue on how to best address this issue through the Bali Fintech Agenda – a set of policies to help countries harness the benefits of financial technology, while at the same time manage the inherent risks.
“But these are all things we are looking at in terms of possible solutions on how to get those costs down, and Fintech, in some respects, might ease this cost for the region."
“So this is an issue that we have been looking at, it’s also an issue that the G20 raised a number of years ago in Sydney and the aim is to try and reduce the cost of that.”
Ms. Stuart said the I.M.F. is very proactive in addressing issues related to the Pacific, especially in maintaining correspondent banking, which is important for Pacific countries that rely on remittances.