The financial crisis has shown that many people need to have a better understanding of the financial issues in order to make informed decisions on matters such as savings, investments, pensions and credit, according to a report to be presented to G20 leaders in Saint Petersburg this week.
The study, by the OECD and Russia’s G20 presidency, monitors progress by the governments of the world’s major economies in implementing national strategies for improving financial education.
The report, “Advancing National Strategies for Financial Education”, shows that financial literacy is in general low among consumers. A recent survey in France revealed 8 out of every 10 people questioned feel lost in relation to financial investments. In the Netherlands, 72% of respondents knew nothing about pension schemes.
The report argues that a generally poor understanding of financial issues can not only impact an individual’s well-being but also affect the long-term stability of the economy. Concern about the problem has risen in the wake of the financial crisis also because of the growing sophistication of financial products, improved access to banking products in emerging-market economies and the shrinking of welfare benefits in developed countries.
Of the 21 countries* covered in the report, nine are implementing a national strategy for financial education along the lines of the principles developed by the OECD and its International Network on Financial Education. The principles were endorsed by G20 leaders in 2012. A further seven countries are well advanced in the design of a strategy.
Almost all national strategies include a programme of financial education in schools as well as the creation of interactive websites for the public. The strategies are generally supported by a mix of public and private resources. Russia, for instance, has earmarked more than 100 million US$ to a 5-year financial literacy project.
Presenting the report with Russian Finance Minister Anton Siluanov in Saint Petersburg, OECD Secretary-General Angel Gurría said: “It’s all about people. Our Citizens should be at the centre of financial reform. The progress made by an increasing number of countries towards a national strategy for financial education is encouraging. But we need to step up our efforts to ensure that people have the necessary understanding of financial matters to make informed decisions.” Read Mr. Gurría's speech.
Mr Siluanov said: "We believe this publication is an important step forward which can help us to achieve better financial stability, inclusive development and individual and households' wellbeing. We commend the OECD for this work and think that the G20 should continue to play an important role to further enhance financial education globally."
The report adds that the strategies must be adapted to the specific needs of countries. The action in India, Indonesian and Mexico, for instance, focuses strongly on supporting financial inclusion.