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Banking on remittances Latin America migrants working in the United States are expected to send a record US $45 billion to their families back home in 2006, according to a recent report from the Inter-American Development Bank (IADB). “It turns out that remittances to Latin America are more than all of the foreign direct investment and all the official development assistance, all the foreign aid combined,” says Donald Terry, manager of the IADB’s Multi-Lateral Investment Fund. “These are enormous flows going into these countries and they support tens of millions of families.” With such huge sums flowing into Latin America, Terry adds the real potential for remittances lies in getting more money circulating through banks, which is why the IADB teamed up with IFAD, the UN agency devoted to rural poverty eradication. Together, the two institutions are working to encourage more banks and micro-financial institutions to offer services to remittances senders and receivers. In particular, they are working to link financial institutions in the US with small banks and credit unions in rural communities throughout Latin America. The idea being that if more remittances were saved in banks, as much as $10 billion US dollars would be made available for local investment and economic growth. “We believe micro financial services is one of the main assets that will help people overcome poverty. Linking financial institutions will enhance that possibility,” says Rosemary Vargas-Lundius, IFAD policy coordinator. |
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