Remittances are characterized as a more stable and less cyclical form of capital flows, making them a good candidate to lower the risk of macroeconomic instability in the receiving country.[1]
Remittances have been categorized as ‘free launch’ in financial terms because, unlike debt financing or foreign direct investment, they do not generate any future financial obligations for the receiving countries. For instance, the report of the Inter-American Dialogue Task Force on Remittances emphasized how remittances promoted a steadily increasing stream of capital to Latin America and the Caribbean since 1998. The report writes:
Remittances have been categorized as ‘free launch’ in financial terms because, unlike debt financing or foreign direct investment, they do not generate any future financial obligations for the receiving countries. For instance, the report of the Inter-American Dialogue Task Force on Remittances emphasized how remittances promoted a steadily increasing stream of capital to Latin America and the Caribbean since 1998. The report writes: