Is it time for a financial Schengen Agreement?

Thu 03 Nov 2016

It is estimated that the equivalent of five trillion dollars moves around the world every day.

Whatever your views on the European Project, it's inarguably the case that the Schengen Agreement made travelling between European countries far quicker and easier than it was in the days of passport control and border checks.

It's also hard to argue with the fact that the occasionally beleaguered Euro has swept away a whole mass of expense and inconvenience for the inhabitants of member countries who like to holiday or shop in the rest of mainland Europe.

So we are occasionally asked if, in this era of relentless globalisation, we will one day have a form of Schengen Agreement that makes it quicker and easier to send money anywhere in the world.

The answer, inevitably, is that while Equiniti International Payments has the expertise to enable payments in a vast number of countries in the world, the welter of arcane rules, regulations and banking restrictions that exist around the world mean that this can sometimes be a circuitous and time-consuming process.

This is largely because - aside from the urgent need to prevent both money-laundering and international financing of terrorist groups - the economies of many nations largely depend on the transfer of money between countries.

Five Trillion Dollars A Day - And The Importance of Transaction Margins to GDP

It is estimated that the equivalent of five trillion dollars moves around the world every day.

Much of it stems from international commerce between developed countries with healthy economies, healthy tax receipts and similar banking systems.

At the same time, countries such as the Phillipines, to name just one of many countries that are in the same position, have a relatively weak economy and a large proportion of the workforce employed overseas.

As you might expect, that means several billion dollars being sent home to the Phillipines every year from Overseas Filipino Workers (OFWs), which provides a currency transaction margin for the economy, and actually represents a very significant proportion of that country's GDP.

There is also the issue of restricted currencies such as the Rupee to consider. It is only possible to buy Rupees once you enter India, and you cannot take any out of the country. So it's hard to see how India, or any of the other countries of the world with protected currencies, could ever join a financial Schengen Area.

The fact is that money doesn't just make the world go around; its movement supports a great deal of the global economy. So if you need to make a payment to one of the world's most obscure countries, Equiniti International Payments can make it happen as quickly as possible; though the need for local economies to benefit from the transaction may sometimes mean that it takes even us a day or two.