The G20 countries are stepping up action to help people make informed financial decisions.
According to an OECD report, “Advancing National Strategies for Financial Education”, after the financial crisis many consumers need a more comprehensive understanding of the financial issues in order to make “informed decisions” on credit, pensions and investments.
The report is to be present at the G20 meeting in Saint Petersburg, Russia, this week.
The study examines progress made by the governments of the world’s largest economies in establishing national strategies for better financial education.
The report states that overall, financial literacy among consumers is poor. Eight out of every ten people feel lost in relation to financial investments, according to a recent survey carried out in France.
A Dutch survey found that 72% of interviewees said they knew nothing about pension schemes.
Consumer understanding of financial products can affect the economy
If consumer understanding of financial issues is poor, the consequences are twofold, the authors argue:
- The well-being of individuals may be negatively affected
- The long-term stability of the economy could also be undermined
Concern about consumer ignorance regarding financial matters in general has increased, mainly because since the crisis financial products have become more sophisticated, and access to banking products in emerging economies have become more easily accessible.
The authors of the report add that the contraction of welfare benefits in the advanced economies means that more people will become interested in financial products.
Nine of the 21* countries covered in the report are implementing a national strategy for financial education, according to OECD guidelines and its International Network on Financial Education. Seven countries are still designing their strategies.
Most of the national strategies include school financial education programs, as well as new publicly-accessible interactive websites.
These strategies are generally funded by a combination of public and private money. Russia says it has allocated $100 million for a 5-year project focusing on financial literacy.
OECD Secretary-General Angel Gurría said as he presented the report with Russian Finance Minister Anton Siluanov in Saint Petersburg:
“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.”
Anton 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 authors emphasized the need for strategies to be adapted to the specific needs of each country. For example, in Mexico, Indonesia and India, they have concentrated on supporting financial inclusion.
*The countries covered include: Argentina, Australia, Brazil, Canada, China, France, India, Indonesia, Italy, Japan, Korea, Mexico, the Netherlands, Russia, S. Arabia, Singapore, S. Africa, Spain, Turkey, the UK and USA.