## No Easy Solution: A Smorgasbord of Factors Drive Remittance Costs

_IMF Working Papers, July 30, 2021_

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## Bibliographic details
- Authors: Tito Nícias Teixeira da Silva Filho
- Published: July 30, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513592954.001

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### Summary
- Author: Tito Nícias Teixeira da Silva Filho
- Publication date: July 30, 2021
- Series: Working Paper No. 2021/199
- Core summary:
  - There has been a global push to decrease the cost of remittances since at least 2009, culminating with its inclusion in the Sustainable Development Goals in 2015.
  - Despite new business models and policy efforts, remittance costs have been decreasing very slowly, contrary to predictions of sharp declines.
  - Remitting to poorer countries remains very expensive.
  - Academic interest on the drivers of remittance costs has been limited.
  - The paper finds a complex, heterogeneous, and unequal remittances ecosystem where costs are driven by a myriad of factors and where there are no easy and quick solutions.
  - Policymakers have limited room to act but still play a very important role.

### Findings and analysis
- Ecosystem characterization:
  - The remittances ecosystem is described as very complex, heterogenous, and unequal.
  - Costs are driven by a myriad of factors; no single or obvious quick fix explains the persistence of high costs.
- Trend observations:
  - Remittance costs have been decreasing very slowly despite sustained global efforts since 2009 and inclusion in the Sustainable Development Goals in 2015.
  - Remitting to poorer countries remains particularly costly.
- Research gap:
  - The paper notes a surprising lack of academic interest focused on the drivers of remittance costs.

### Policy implications and recommendations
- Policymaker role:
  - While policymakers face limited scope for action given the multiplicity of drivers, they still have an important role to play in addressing remittance costs.
- Implicit guidance:
  - Because the environment is heterogeneous and drivers are multiple, policy responses should be tailored and multifaceted rather than relying on a single solution.
  - Expectation management: quick and easy policy fixes are unlikely to deliver large, rapid reductions in remittance costs.

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_Source: https://www.imf.org/en/publications/wp/issues/2021/07/30/no-easy-solution-a-smorgasbord-of-factors-drive-remittance-costs-462130_