The examples of Mexico and Sri Lanka are important, because authorities in both countries have chosen to play an active role in collecting, comparing and disseminating the cost information of each of the available products for sending remittances from the USA (Mexico’s main source of remittances) and Middle East Countries (Sri Lanka’ main source of remittances), respectively.

Mexican authorities collect and compare the fees charged by banks and money transfer companies every month. Fees are disclosed in the internet by the Office of the Attorney for Consumer Affairs <u>(http://www.profeco.gob.mx/html/envio/docinter.htm), as well as through</u> consular offices.<sup>15</sup> In Sri Lanka, the central bank plays also an important role in collecting and disseminating data on fees on remittance products offered by banks.

Because information is critical for competition in the marketplace, authorities, but also NGOs in other developing countries could consider playing an active role in collecting, comparing and disseminating information on a regular basis about the fees of different money transfer products. This may help migrants – in particular those that do not speak the language of their host country – to make better informed choices.

# **Accounts in US Dollars or Other International Currency**

Another proposal to foster fee reductions is to allow residents in developing countries to have bank accounts in US dollars, or in any other major international currency. This would ensure that the amount in remittances that beneficiaries receive is the same amount sent by migrants. Moreover, it is argued that the beneficiary would have the option to convert the funds into local currency by choosing the institution that offers the best exchange rate.

Although this proposal seems reasonable, the survey found that in practice most developing countries already allow their citizens to open accounts in US dollars or any other major international currency. Of the 40 countries covered in the survey, 2 countries are dollarized – Ecuador and El Salvador -- and 32 other countries already allow residents to open accounts in US dollars or any other major international currency.<sup>16</sup> The only six developing countries in this survey that do not allow residents to have bank accounts in US dollars are: Bangladesh, Brazil, Colombia, Guyana, Tunisia, and Venezuela. In those countries, remittances must be paid in local currency to beneficiaries.

More studies are needed to assess the effectiveness of deposit accounts denominated in US dollars or any other major international currency for remittances beneficiaries. At this time, the most important challenge in developing countries is not the availability of dollardenominated bank accounts, but the fact that only a small amount of remittance beneficiaries 15 PROFECO monitors the 22 largest money transfer companies and banks that provide remittance services from the USA to Mexico. Because fees also vary from city to city, PROFECO also monitors fees in 9 cities in the USA with the largest concentration of Mexican population.

16 The use of dollar denominated accounts in developing countries should be examined further. In practice, some countries have in place several restrictions that make it impossible for most beneficiaries of remittances to open or maintain a bank account in US dollars.

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