This share prices have a 15 minute delay and are shown in the local time of the market in which the quote is displayed.
Improving financial education, key to greater financial resilience and financial inclusion
Bruegel´s report analyzing the results of the 2023 European Commission survey to measure the level of financial knowledge in the European Union (EU). The report was prepared at the request of the Belgian Presidency of the Council of the European Union as all countries have or are in the process of a financial literacy strategy and there is an urgent need to roll out these strategies, to monitor progress and to establish best practices. Results of the survey shows a low level of financial knowledge across the EU and that financial literacy increases with GDP per capita, with education levels and with age. According to the report, financially literate consumers are more resilient to financial shocks and participate more in the possibilities offered by the financial system as a whole: they invest more in the stock market, save more, manage their debts better and plan their retirement more effectively.
Main takeaways of the report:
- Results of the Survey shows that only half of the respondents answered at least three of the five questions correctly. This represents a low level of financial knowledge and an obstacle for individuals to invest in financial markets. Regarding inflation, there is a large difference between the least and most educated respondents in terms of answering the relevant question correctly. Gaps in understanding the concept of inflation are also evident between the youngest (18-24) and oldest respondents (55+) and between the poorest and richest households.
- Greater financial knowledge is linked to greater financial resilience and inclusion. Financially knowledgeable consumers are less financially fragile, in the sense that they cope better with unexpected financial shocks, are more likely to participate in stock markets, save more and plan better for their retirements, and are better at managing debt. Higher levels of financial knowledge have greater percentages of adults saving with and borrowing from financial institutions. Contrary to that, people with low levels of financial knowledge tend to borrow at more expensive terms which is particularly true for young people.
- Digital finance needs more financial knowledge: For example, evidence from US millennials (broadly, those born in the 1980s and up to the mid-1990s) shows that those who use mobile payments are also more likely to mismanage their funds or experience financial difficulties and are less financially knowledgeable. However, when it comes to online banking, evidence from Cyprus shows that it is used by those with more financial knowledge or similarly, preliminary evidence on holdings of crypto assets (effectively Bitcoin, which dominates the crypto market) shows that countries with higher levels of financial knowledge have more individuals holding crypto assets.
- Financial literacy strategies should focus on digital skills as financial services are increasingly digitalized and also should help close gender and other gaps in knowledge among vulnerable groups, and should ensure that financial education starts early and in schools.
Filter results
According to Kristalina Georgeva IMF Managing Director, lifting growth requires three things: one, regulatory housecleaning to unleash private enterprise; two, deeper regional integration; and three, preparedness to harness AI.
According to The European House – Ambrosetti, the European Union has an opportunity to boost competitiveness and growth by simplifying regulatory and supervisory frameworks, particularly in the areas of sustainability and the financial sector.
According to Ramón Casilda Béjar, Spain, in today’s complex geopolitical landscape, has the opportunity to strengthen its role as a bridge and connecting country between Ibero-America and the European Union, revitalizing investment flows in both directions.
According to @ECB, in moments of acute stress, the public often turns to physical currency as a reliable store of value and a resilient means of payment, underscoring the crucial role it plays above and beyond everyday transactional convenience
According to Juan S. Mora-Sanguinetti, in Spain a 10% increase in regulatory volume leads to a 0.5% drop in employment in companies with fewer than 10 employees.
According to Hélène Rey “In a world where stablecoins, particularly those pegged to the dollar, become an important global payment tool, we must brace ourselves for substantial consequences”.
@judith_arnal proposes reforms for the EU to advance regulatory simplification, starting with consensus on its meaning, with competitiveness as a pillar, plus coordination mechanisms and a governance rethink.
According to @iee_org, Spain has one of the most demanding tax environments for businesses within the European and international context, which may have significant implications for competitiveness, foreign investment attraction, and business expansion.
According to Christine Lagarde for the euro to gain in status, Europe must take decisive steps by completing the single market, reducing regulatory burdens and building a robust capital markets union.
According to the Bank of Spain, in a context of strong growth in transactions and prices, the conditions under which new mortgage loans are granted currently show no signs of easing in lending standards.
McKinsey notes that European private capital is half the size of the U.S. and must play a key role in boosting competitiveness, by driving innovation, scaling firms, and mobilizing the investment needed to close the gap with other regions.
IMF states that global financial stability risks have grown significantly, driven by tighter financial conditions and heightened trade and geopolitical uncertainty.