PRESS RELEASE
European Conference of Financial Services ECFS2022 SUSTAINABILITY AND RESILIENCE – THE NEW COORDINATES OF FINANCIAL MARKETS 6th Edition:
Financial education has made significant progress in Romania. The pandemic showed that Romanians can be resilient and cautious.
Bucharest, March 25, 2022 – The level of financial education has increased in Romania, and this was evident during the pandemic crisis when Romanians were cautious and resilient in managing expenses in relation to their income. Additionally, domestic financial systems are more solid and prepared to face a crisis. These are some of the conclusions from the European Conference of Financial Services ECFS2022 "Sustainability and Resilience – The New Coordinates of Financial Markets" 6th Edition, organized by the Institute of Financial Studies on March 24-25, in Brașov.
Furthermore, during the conference, four panels were organized with the participation of 121 academic staff and doctoral students interested in financial markets topics, who prepared and presented 50 research papers. This edition of the ECFS conference saw both online and in-person attendance of researchers and academic staff from Albania, China, Switzerland, Italy, Poland, Spain, and Romania.
The Institute of Financial Studies has played an essential role in increasing the level of financial education, said Nicu Marcu, President of the Financial Supervisory Authority.
"Two years ago, we set ambitious goals together with the ISF leadership, and I am pleased to say that these goals have been far exceeded. We are also working on an internship project for students, which we will launch soon, giving us the opportunity to recruit personnel from future graduates.
The ISF performed well even during the pandemic, when all activities were conducted predominantly online. For example, in 2021, in terms of financial education, 66 educational program sessions were held, through which 800 people were trained. In some universities, additional sessions were requested due to high interest, and the available spots filled up quickly.
Thus, there were an additional 23 sessions for 900 pre-university teachers and 51 more sessions for 4,061 students. I congratulate all ISF employees!
We aim to increase the coverage of financial education, and from this perspective, I would like to commend the Parliament's initiative to establish a national day for financial education," said Mr. Nicu Marcu, President of ASF.
Beyond the issue of financial education, the President of ASF emphasized that the RCA market needs stronger competition and regulatory mechanisms, particularly in the area of pricing.
“We have been working for some time on finding a solution for the RCA market. ASF has proposed a government resolution for temporarily capping prices to protect the population. This option will likely be adopted soon, for a limited time period. We aim, as stated in the 2017 law, to establish a state-owned company that will be operational in the near future. It would have been preferable for the market to regulate prices, but there are few companies operating in this area in Romania. We are trying to attract other companies from abroad. The more competition there is, the greater the efficiency, and prices will be lower,” said Nicu Marcu, President of ASF.
Sustainable development is essential for an EU member state, considering the European Commission's medium- and long-term priorities, explained Leonardo Badea, Deputy Governor of the National Bank of Romania (BNR).
“We are facing two major shocks affecting sustainability: the pandemic and the conflict in Ukraine. At the EU level, since the start of the pandemic in 2020, consumer behavior has changed. According to a study, 42% of respondents delayed major purchases, and 80% did not make vacation plans, across the EU. Some sectors have proven more resilient than others, such as IT and banking.
The banking sector must continue to ensure balance, even though it is well-capitalized, we must acknowledge it has a high degree of volatility—we don’t know exactly what measures will be adopted at the European level. What is certain is that this time, banks were much better prepared for both the pandemic and the crisis. The domestic banking sector is currently not exposed to this conflict in Ukraine,” explained Leonardo Badea, Deputy Governor of the BNR.
"We need a national strategy to increase the level of financial education", said Adrian Câciu, Minister of Public Finance.
“Complex situations show us that we are not sufficiently prepared. This means we need continuous education. Development cannot exist without education. The shortcomings of education, especially financial education, create both individual and state-level costs. We have made significant progress in recent years.
When there are opportunities for citizens to borrow under advantageous conditions, the prudence to consider whether they can repay in the future is often lacking. This is where financial education comes in—it helps you focus on what you need, not just what you want, and when it comes to what you want, it helps you plan reasonably for it over time.
Financial education must be much more present in society and better promoted and disseminated across all levels of society. Research in this field needs to be developed, and not only research but also the training of new specialists. For example, we need macroeconomic and macro-financial analysts.
Increasing the level of financial education requires a joint effort at the governmental level, supported by the economic environment and specialists. I want a national strategy for financial education and a national program for financial education,” said Adrian Câciu, Minister of Finance.
These two years of the pandemic have demonstrated the maturity and resilience of local financial markets, said Valentin IONESCU, President of the Institute of Financial Studies (ISF).
“The harsh and restrictive measures adopted by governments at the start of the pandemic, in the first part of 2020, affected capital markets worldwide. In Romania, the stock exchange suffered a correction of 30% over a short period, but it quickly recovered and continued to develop. Compared to other historical crises, financial markets are now more mature, instruments are more complex, and ASF's response speed has been very good, immediate. Risks are being monitored, and measures are ready for any scenario. Returning to today’s conference topic, I want to underline that to be financially resilient, one must have basic financial education. How we manage income compared to expenses remains a critical factor in times of crisis when it comes to resilience. Families with a high level of financial education have taken preventive measures and are prepared for an unexpected shock. Moreover, financial literacy is essential,” explained Valentin Ionescu, President of ISF.
According to him, the insurance market saw significant growth last year, directly proportional to the increase in financial education levels.
“In 2021, the insurance market grew by 24%. The most notable increases were seen in life and health insurance, and we hope this trend will continue. Compensation payments by insurance companies amounted to 7.6 billion lei, showing that the industry is resilient. Additionally, in 2021, the liquidity ratio increased for insurance companies compared to 2020. Despite adverse conditions, financial markets supervised by ASF have proven to be resilient,” said Valentin Ionescu, President of ISF.
The Bucharest Stock Exchange is on the verge of surpassing the Prague Stock Exchange in terms of capitalization, says Radu Hanga, President of the Bucharest Stock Exchange.
"We've reached a capitalization of 29 billion euros for locally listed companies—approaching the league of regional markets. Last year, we surpassed the capitalization of the Budapest Stock Exchange, and now we're nearing the capitalization of the Prague Stock Exchange. Trading volumes are increasing across all types of financial instruments.
2021 was an extraordinary year for the BVB. On the other hand, we believe this is just the beginning. In the coming months, we might see a slight slowdown due to the conflict in Ukraine.
In the past year, eight technology companies have been listed, along with a few from the agricultural sector.
The series of crises we are going through started 15 years ago. At that time, we learned that you rely on the companies around you and that local companies are essential. After 2007–2008, we saw growth in local banks in Romania. What we see at the BVB is a continuation of this trend.
Companies come to the stock exchange for visibility. We have the pension funds industry, the investment funds industry (an additional 100,000 people invested in BVB through investment funds last year), and retail investors who directly invest in the stock exchange," explained Radu Hanga.
The financial market plays a key role in channeling resources toward investments, says Acad. Lucian Albu, President of the ISF Scientific Council.
"The sustainability of financial markets is based on the principles on which the global financial market operates. During the last two terms of ASF, Romania managed to advance to the emerging capital markets. Some economists say that the financial market, alongside the banking system, is a creator of money.
Financial education doesn't happen through individual courses, events, or campaigns. If we look at Western countries, it starts from kindergarten, from the family—the entire society is built on this foundation. Their economies succeed in the long run because the population, companies, government, and financial markets have rational expectations and exhibit prudent and balanced behavior.
Romania has surpassed Greece, Slovakia, and Lithuania in terms of per capita income. In the financial market sector, we are still behind but are on par with other Eastern EU countries," explained Acad. Lucian Albu.
The need for companies to adapt their strategies to government policies and social trends has created a new, highly sought-after job globally—the ESG manager, Alexandra Smedoiu, President of CFA explained.
"More and more young people between the ages of 25 and 35 want to get certified by us, with the CFA designation being one of the most prestigious globally among financial professionals. Administered by the CFA Institute, the CFA program is a postgraduate program that prepares and tests candidates in ethics and professional standards, financial statement analysis, economics, portfolio management, and the analysis and evaluation of various financial instruments and investments.
Continuous training is also essential, which is why we strive to bring new speakers and courses to the Romanian market.
At the same time, we contribute to the growth of financial education through volunteering. We are also looking at new subjects, and last year we launched a new certification that requires only one exam and 120 hours of dual study. We've noticed significant interest. We've also received inquiries from employers who want to train analysts to create strategies around social and governance issues. There's an urgent need for specialists in this area throughout Europe, particularly for this new profession—ESG manager," explained Alexandra Smedoiu.
About ISF
The Institute of Financial Studies (ISF), founded by the Financial Supervisory Authority, is a center of excellence in studying financial markets and conducting financial education programs to ensure the competencies, skills, and knowledge of the personnel in financial institutions and the ASF staff. It also aims to raise the level of financial education for consumers of non-banking financial services and products. In the long term, ISF aims to align its activities with European requirements, transitioning from knowledge accumulation to the accumulation and evaluation of competencies. It seeks to provide professional training programs for the non-banking financial sector, adapting to new organizational processes driven by legislative requirements, market dynamics, and the European framework, contributing to the maturity of Romania's non-banking financial market, enhancing its ability to cope with competition induced by globalization or the effects of economic crises.