1. Where are remittances across borders included within the balance of payments?

Are they current or financial account components?

Ans: Remittances across borders are generally reported under the capital account of the
balance of payments and included in the “current transfers” in the current account.
2. Under what conditions-for example, for which countries currently-are remittances
significant contributors to the economy and overall balance of payments?
Ans: For smaller receiving countries, typically developing countries, remittances can
represent more than 25% to GDP. In many cases, this is greater than all development
capital and aid flowing to these same countries. It creates positive impacts to BOP in
their home countries and negative impacts to BOP in their host countries. Sometimes,
remittance can be considered as a “plug” to compensate for declining export
competition and dropping foreign direct investment.
3. Why is the cost of remittances the subject of such intense international scrutiny?
Ans: As the volume of global remittances has increased dramatically leading to increase
in cost related to transactions, people start to concern about the remittance charges
which seem to be excessive and considered to be exploitative charges. It is also obvious
that fees and charges may differ across institutions. People tend to do the transaction
through online payment systems which charged lower, causing the difficulty of tracking
these payments which create a concern about where does remittance flow go to?
Therefore, the objective of the program is to provide more information that is
publicly available to people remitting funds thereby adding transparency to the process-
is clear.
4. What potential do new digital currencies-cryptocurrencies like Bitcoin-have for
cross-border remittances?
Ans: cryptocurrencies are the decentralized and completely digital currency, it does offer
ideal solution for cross-border transfers with multiple benefit, as it is convenient, saves
on currency conversion and transfer fees, which could make sending money overboard
become easier.