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Billions in Motion:
Latino Immigrants, Remittances and Banking |
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Pew Hispanic Center
Multilateral Investment Fund Executive Summary
By Roberto Suro
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 Until
recently, the money management practices of Latino immigrants in the United
States aroused little attention outside their own communities. That changed as
the remittance flow doubled in size during the second half of the 1990s.
Although the size of the average remittance transfer is miniscule—$200 to
$300—in the world of international finance, the cumulative sums have now
captured the attention of government policymakers and bankers in the United
States and Latin America. Remittances to Latin America and the Caribbean totaled
$23 billion in 2001, according to estimates by the Multilateral Investment Fund.
Not long ago this was a cottage industry in which cash was often hand carried
across borders. In the 1990s it evolved into a traffic dominated by
wire-transfer services such as Western Union, and now it is becoming
increasingly formalized as more credit unions offer remittance services and with
the introduction of electronic banking products that allow a remittance
deposited in an Automatic Teller Machine (ATM) in the United States to be
retrieved almost instantly from an ATM in Latin America.
 Central
banks across the region are tracking remittance income more carefully which has
somewhat boosted the numbers they report. Nonetheless, there seems little doubt
that the remittance flow has continued to increase over the past two years even
as the U.S. economy dropped from its boom time peaks. In 2000 remittances to
Mexico, El Salvador, Guatemala, Honduras and Nicaragua—nations that receive
almost all their money transfers from the United States—totaled some $10.2
billion. This year that figure could reach $14.2 billion or more, a flow of $39
million a day. By 2005 the sum, which does not capture all remittances to Latin
America, will go beyond $18 billion, according to projections by the Pew
Hispanic Center.
These figures are evidence of a kind of economic activity that is resistant to
the U.S. business cycle. They also reflect the needs pressed by economic hard
times in Latin America and efforts by governments in those receiving countries
to smooth the flows. Moreover, they are indicators of an international financial
activity that has grown markedly not only in size but also in the levels of
competition and efficiency in the last few years. And, those sums are also the
monetary expression of a profound human bond between people who come to the
United States to work for long hours at low wages and the families they left
behind.
 Over
the past two years Wells Fargo, Bank of America,and Harris Bank, as well as many
other financial institutions, have launched initiatives to capture a larger
share of the Latino immigrant market. Some U.S. banks have acquired stakes in
Mexican banks or established cooperative arrangements to facilitate remittance
flows. Many of the nation’s credit unions have also created such programs and
have entered the international money transfer arena.
What has not
changed is the population of remittance senders—except that it continually grows
larger. They are, as they long have been, mostly recent immigrants with little
education and low earnings and not much familiarity with banking systems either
in the United States or in their home countries. Because they are both the
generators of wealth in this industry and the prime consumers, their decisions
about how to manage their money will largely determine how the remittance flow
evolves.
[Billions
in Motion: Latino Immigrants, Remittances and Banking PDF]
[Billions
in Motion: Latino Immigrants, Remittances and Banking ZIP]
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November 24, 2002
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