The European Investment Bank (EIB) and the European Banking Federation (EBF) joined forces to organise in Paris, on 22 and 23 March 2007, the second FEMIP Conference (1), dealing with the issue of financial transfers from migrant workers in the Euro-Mediterranean area, a field in which little work has been done as yet.

This event was characterised by the fact that it involved the Euro-Mediterranean banking sector in the discussions on this subject: over two days, the Conference provided a forum for 25 speakers and around 350 participants, including the chairmen of some 15 European and Mediterranean banks, representatives of five central banks (the ECB and the central banks of France, Lebanon, Algeria and Turkey), senior officials from international organisations (OECD, Inter-American Development Bank, African Development Bank), development agencies (AFD, DFID, KFW) and microfinance institutions, and the leaders of migrant communities.

The speakers' profiles, their contributions, the reference documents and the list of participants are available on the Conference website (

1. Objectives of the 2007 FEMIP Conference

In organising this Conference, FEMIP - which has in fact become the Euro-Mediterranean development bank and whose remit is to speed up the modernisation of the Mediterranean partner countries' economies - aimed to raise awareness in three areas:

  • reducing the costs incurred by migrants when making transfers and thus increasing their ability to help their countries of origin economically;
  • promoting cooperation between banks in the EU and the partner countries to facilitate migrants' access to financial services;
  • exploring the conditions for successfully leveraging the financial flows from migrants to finance the development of their countries of origin. The work of the Conference resulted in two observations and three priorities.

2. The observations highlighted by the Conference

1st observation: as far as migrants' financial transfers are concerned, the Euro-Mediterranean region is lagging behind developments that have been taking place in the rest of the world in terms of:

  • the use made of banks by migrants in Europe - with the notable exception of the Turkish communities in Germany - in contrast to the level prevalent among Latin Americans in North America, Spain or Portugal;
  • an active link between transfers and productive investment owing to the low level of bank usage and lack of information among the communities concerned;
  • the use made of innovative instruments to support economic development, with the notable exception of Turkish banks and in contrast to Mexican banks, for instance.

Apart from informal channels, which offer no security, migrants therefore often only have a choice between the postal services and the specialised money transfer agencies. This lack of competition results in uncompetitive financial terms (sometimes exacerbated by the application of arbitrary exchange rates), which thereby reduce the ability of migrants to contribute to the development of their countries of origin.

2nd observation: things are changing and concerted strategies need to be put in place.

With migrant communities putting down roots in Europe and the emergence of middle classes in some countries of origin, the economic behaviour of migrants is changing, with the emphasis on more productive use of their savings in their countries of origin. These aspirations can support North-South banking cooperation to provide cross-border financial services for migrants and their families.

There have been a number of cases on both sides of the Mediterranean where migrants have been encouraged to make use of banking services, particularly involving Turkish, Moroccan and Tunisian banks but also a number of European institutions, especially mutual and savings banks, which have undertaken to encourage migrants to open accounts by taking into consideration their specific requirements.

The initiative exists and it is not just the prerogative of the Northern countries, which is a very comforting thought. However, migrants and their families are still not being offered a continuous range of banking services that meet their requirements in terms of transfers at a reasonable cost and investment opportunities in line with their expectations.

3. Priority areas for action

On the basis of these observations, the Conference identified three priority areas for action:

  • the first concerns the transparency of the transfers market: in particular by setting up electronic platforms for migrant communities to provide them with information about the costs of the transfer facilities available and the services offered. This initiative must also focus on diversifying the money transfer methods. With this in mind, the Conference called for the postal networks and services in the countries of origin to be opened up to banking cooperation, in both the North and the South;
  • the second involves modernising the banking system in the partner countries and systematically developing North-South banking partnerships in order to establish mirror financial services for migrants and promote mutual recognition of the banking and economic background of customers on both sides of the Mediterranean. As part of this, the Conference called for support for the training of bank staff from the countries of the South in risk management and for the definition of an appropriate regulatory framework for connecting up payment systems between banks in the South and those in the North;
  • the third area for action involves strengthening the link between financial transfers and investment in the countries of origin. In this connection, the Conference examined two courses of action: refinancing of banks on the international markets via securitisation schemes (like the Turkish banking community, whose securitisation programmes' outstandings since 1991 total over USD 13 billion); and the development of cooperative financing facilities, first and foremost microfinance.

4. FEMIP's value added to help achieve these priority objectives

FEMIP will work towards achieving these priority objectives, first of all by making its Ministerial Committee (composed of the Euro-Mediterranean Finance Ministers) aware of these issues at its next meeting, which is scheduled for 13 and 14 May in Cyprus, in order to outline decisions in principle falling within the economic governance of the Euro-Mediterranean region in terms of managing the financial flows generated by migrants.

Through its financing operations and technical assistance, FEMIP will continue to work towards strengthening the capacity of the partner countries' banking systems, with a view to facilitating closer links with their EU counterparts for the provision of banking services to migrants. With regard to securitisation FEMIP, which is supporting an initial experiment in Lebanon, can help to extend this facility to other countries in the region.

At a wider level FEMIP can, with its risk capital, promote the mobilisation of locals' and migrants' savings in favour of investment in the economic development of the partner countries. In these areas, and to encourage the creation of tailored banking products, FEMIP intends to tap the analytical capacity of the university networks with which it has entered into partnership agreements.

In addition to its task of financing development, FEMIP is also a centre of expertise and a forum for facilitating reform and modernisation in the nine Mediterranean partner countries. In December 2006, the European Council set the amount available to FEMIP over the period 2007-2013 for the development of the private sector, regional integration and socioeconomic infrastructure at EUR 8.7 billion. This is virtually double the resources that were made available for the 2000-2006 period (excluding Turkey, which became an Accession State in October 2005).

(1) FEMIP is the EIB's specialised financial facility established in October 2002 to speed up the modernisation of the economies of the Union's partner countries under the Barcelona Process.