Financial education, strategic objective for the Institute of Financial Studies and for the Financial Supervision Authority
Bucharest, November 26, 2020 - Increasing the level of financial education will positively influence the development of financial markets. Which is why it has become a strategic objective and ZERO priority for the Financial Supervisory Authority and the Institute of Financial Studies, but also for academia and the private sector. This was the conclusion of the ISF2020 International Conference "New generations of consumers of financial services - how we train them, how we educate them", organized by the Institute of Financial Studies (ISF), on November 24, 2020.
Romania ranks last in the EU in terms of the level of financial education of the population.
The event, which was broadcast online, was attended by the management of several institutions such as the Financial Supervisory Authority, the European Securities and Markets Authority (ESMA), the European Insurance and Occupational Pensions Authority (EIOPA) and the Organization for Cooperation. and Economic Development (OECD). The conference was also attended by representatives of academia and entities operating in the non-bank financial market.
The President of the Financial Supervisory Authority, Mr. Nicu Marcu, pointed out in his opening speech that financial education is one of the fundamental directions of action of the Authority, which invites, at the same time, social and individual responsibility for risk and benefits. "What we propose is that through financial education we ensure a correct understanding of how the non-bank financial market works, the tools and services we use, as consumers," said Mr. Nicu Marcu.
Mr. Valentin Ionescu, Director of the Strategy and Financial Stability Department within the A.S.F. and, at the same time, the President of ISF, stated “Financial education must focus on main objectives that can be implemented in different strategic directions of action, starting both from the need to increase the level of consumer protection and from the need to improve the level of financial capability; of the degree of financial inclusion. "
"Investor education is an increasingly discussed topic. You might be wondering why ESMA is so interested in such a topic as investor education? First of all, naturally, we have had and continue to have a strong interest in investor protection. Its protection is a precondition for strong and stable financial markets. We need to build and maintain investor confidence in capital markets, otherwise there will be no desire to invest, and this will ultimately have negative consequences for the financial services industry, but especially for economies as a whole. " , said Ms Verena Ross, Executive Director at the European Securities and Markets Authority.
On the other hand, Timothy Shakesby, Coordinator of EIOPA's Conduct and Supervision Directorate, emphasized the extremely important role of financial education at a time when the whole picture of financial markets is being affected by the COVID-19 pandemic. "Financial decision-making depends on existing financial education, especially in the event of a pandemic, a new context in which both the supply and demand for financial services are adapting," said Timothy Shakesby.
In his turn, the Vice President of the Financial Supervision Authority, Mr. Dan Armeanu, explained that at the microeconomic level, the low level of financial education has negative long-term effects in economic and social terms, which can, moreover, be accentuated. "This pandemic crisis has practically caused a high degree of unpredictability of the economic and financial environment worldwide and has led to changes in various markets, such as the labor market, a context in which people are forced to make unforeseen financial decisions. they can affect the standard of living ", said Mr. Dan Armeanu.
Also in the context of the global health and economic crisis, Flore-Anne Messy, Coordinator of the OECD's Division of Insurance, Private Pensions and Financial Markets, emphasized the importance of protecting vulnerable groups through financial education to overcome the situation. generated by the COVID-19 pandemic. "Based on the recent study on the level of financial education of adults, presented by the OECD in June 2020, the low level of financial adjustment registered especially in the countries of Eastern and South-Eastern Europe emerged. If before the pandemic the percentage of those who managed to save actively was about 50%, after these months, the level fell to 25% of the total population. There is clearly a direct relationship between the level of financial resilience and the level of financial education ", said Mrs. Messy. Participants in the ISF conference stressed that financial education must play an important role in the education system of the next generation, which has totally different financial behaviors from previous ones. According to the presentation by the OECD representative, the new generations have less knowledge and financial behavior compared to the rest of the population - they save less, do not have a budget plan, risking a high level of financial stress in the long run due to negligence in their decisions financial. "That's why young people - the 15-24 age group - have been most affected by the risk of unemployment and any reduction in income has significantly affected them in these pandemic months, with no financial support saved," Ms Messy said.
The same concern for the new generations was shown by Mrs. Verena Ross, who stated that the “millennials”, who have recently reached maturity, approach investment decisions differently from their predecessors. "While past generations have traditionally collaborated with banks or other financial advisers by visiting the counters, so face to face, which involves a number of limitations, young people - many of them entrepreneurs - are increasingly getting their information from the Internet and I use online service providers ", mentioned the Executive Director at ESMA.
Financial inclusion was another aspect of the financial education process, which was discussed at the ISF Conference.
ISF2020 International Conference "New generations of consumers of financial services - how we train them, how we educate them & quot; - 6th edition - was an extremely useful discussion platform, through which a series of principles and ideas were launched, which will be real bridgeheads for future events of debate on financial education.
About the Institute of Financial Studies
The Institute of Financial Studies, founded by the Financial Supervision Authority, is a center of excellence in the field of market research and financial education programs to ensure the skills, abilities and knowledge of financial institutions and ASF staff and to increase the level of financial education of consumers of non-bank financial services and products. In the long term, ISF aims to align its activity with European requirements, move from knowledge accumulation to skills accumulation and assessment, provide training programs for the non-banking financial field adapted to new organizational processes, determined by legislative requirements, market dynamics and of the European framework, contributing to the maturation of the non-banking financial market in Romania, to the creation of its capacity to face the competition induced by globalization or the effects of the economic crises.