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Digital Money and Remittances Costs in Central America, Panama, and the Dominican Republic
Author:
Ms. Alina Carare
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Lavinia Franco
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Metodij Hadzi-Vaskov
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Justin Lesniak
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Dmitry Vasilyev 0000000404811396 https://isni.org/isni/0000000404811396 International Monetary Fund

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Mr. Yorbol Yakhshilikov
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Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 238
Language:
English
Publication Date:
02 Dec 2022
DOI:
https://doi.org/10.5089/9798400227097.001
ISBN:
9798400227097
ISSN:
1018-5941
Pages:
29
Keywords:
Digital money; cryptocurrency; stablecoin; remittances
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper investigates factors that predict variation in digital and non-digital remittance fees over time and across countries, exploring differences between CAPDR and other regions. The paper fills a void in the literature on how country- and corridor-specific factors relate to remittance fees at different levels of digitalization of the transaction mode. It also complements stylized facts and regression analysis with a survey analysis of the CAPDR authorities’ views on the latest developments, possibilities, and risks related to digital remittances with a view to gauging the authorities’ potential role in further reducing the cost of cross-border payments more generally and remittances fees in particular. The paper finds a clear trend of declining remittance fees across countries and at any level of digitalization, albeit they remain higher for CAPDR countries relative to non-CAPDR countries. More competition, financial and digital development in receiving countries—such as debit/credit card ownership or bank branch penetration—are associated with lower remittance fees, especially in CAPDR. The surveyed authorities actively explore the use of digital money to advance domestic payment systems, expedite financial inclusion, and lower remittances fees, yet see considerable risks, especially for preserving monetary sovereignty in CAPDR.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2022: Issue 238