Can blockchain technology reduce the cost of remittances?

Friederike Rühmann, Sai Aashirvad Konda, Paul Horrocks and Nina Taka

No 73, OECD Development Co-operation Working Papers from OECD Publishing

Abstract: The achievement of the Sustainable Development Goals (SDGs) demands unprecedented resources and efforts. Remittances as one of the largest development finance flows are an important source of income for millions of households in developing countries and offer tremendous potential to contribute towards the achievement of Agenda 2030. However, the high cost of sending remittances limits their full potential. The global average cost of sending USD 200 is 6.9% of the remittance. SDG 10 C aims to reduce the cost to less than 3% and to eliminate remittance corridors with cost higher than 5% by 2030. Blockchain technology promises to disintermediate banks, transform the financial landscape and drastically reduce the cost of cross-border transactions, yet there is a need for further evidence on this topic.The OECD Development Co-operation Directorate (DCD) has developed this paper to provide an overview of diverse perspectives on the intersection of blockchain technology and remittances by exploring the opportunities and challenges of this technology for reducing the cost of remittances. The paper identifies several limitations, such as data privacy risks, regulatory uncertainty and last-mile delivery, among others, while investigating whether blockchain technology is the solution to reduce the cost of remittances.

JEL-codes: E58 F24 O19 (search for similar items in EconPapers)
Date: 2020-04-21
New Economics Papers: this item is included in nep-env, nep-mac, nep-ore and nep-pay
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Citations: View citations in EconPapers (4)

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