Opening remarks by Angel Gurría, OECD Secretary-General
Paris, 20 May 2009
Mr. Darcos, distinguished guests from around the world and from here in France:
The OECD is honoured to hold this international symposium with our partner: l’Institut pour l’Education Financière du Public. The Symposium addresses an issue of critical importance in today’s world: financial awareness and education.
The financial crisis has reached every country, highlighting the need for strengthened national and global financial regulation and supervision. Corrective policy measures have been implemented in many countries. These measures have also included initiatives to improve consumers’ financial literacy, awareness and capability. We should not forget that the low level of financial literacy observed in most countries, has been - if not a direct cause of the crisis - at least one of the aggravating factors.
Financial markets and services are playing a greater social and economic role in the daily life of the average individual. At the same time they are also becoming increasingly complex, and the associated risks are multiplying. Households and individuals are being called upon to take financial decisions that could have severe consequences for their wealth and well being. They need the right financial skills to both protect themselves and also to benefit from the many new products available. Households that are finance savy may also contribute to overall financial and economic stability and to the development of the countries they live in.
If there is a consolation to be gleaned from this crisis, it is that the importance and profile of financial education has been raised decisively around the world. Some might even say that we are experiencing a “teachable moment” when the public is more interested in and wants to know more about financial matters than ever before. Financial education is climbing up national agendas around the world. More and more countries are developing national strategies. The participation today of the French Education Minister Xavier Darcos and the French Economy, Industry and Employment Minister Christine Lagarde attest to the importance the French government places on financial education. It is thus not surprising that financial education is also a component of the OECD Strategic Response to the Financial and Economic Crisis. But not all policymakers are onboard. Financial education is missing from the current G20 statement. We will try to correct this.
In a short while Mr. Laboul will share with you the details of the OECD financial education project and the work carried by the newly created International Network on Financial Education. Financial education is one strategic priority of the OECD. But the creation of this Network conveys another important message from the OECD: we are an open organisation and as such we wish to work together with all interested non OECD countries. This is because financial education is a global issue. I think the message is clear from the composition of this Network, which comprises representatives from more than 50 countries.
But let me be more focussed. I will touch first on the important issue of financial education at school (in honour of our guest Mr Darcos). Next, I will move to vulnerable groups and an area that deserves particularly attention: pensions.
One of the main, and now urgent, challenges is to move from raising awareness on financial issues to actually changing consumers’ behaviours. As many of you have identified, we can do this by integrating financial literacy into school curricula. You might assume that our IT-skilled and globally connected young generations would be at ease with financial matters. Evidence clearly shows the opposite. Most surveys conducted in OECD and non OECD countries including in France, demonstrate that youth know little about financial matters -- even less than adults. Young people think this is a boring and stressful topic, not relevant for them. This is all the more worrying since social and economic trends imply that younger generations will need to be more financially skilful than their elders.
Through schools we can reach the widest national audience and nurture financial capability and responsibility. And, as shown in other areas of policy intervention such as health care prevention, children and teenagers are very good disseminators of information and changed behaviours to their parents and relatives.
Many countries have already grasped the significance of this issue and have included financial education into school curriculum. But there are challenges: crowded school curricula, lack of sustainable resources and lack of training for teachers and trainer. And governments must have commitment and must also apply themselves to coordination between relevant public bodies and partners.
In 2005, the OECD Principles and Good Practices on Financial Education and Awareness approved by OECD Governments recommended that the teaching of financial education start as early as possible and at school. Further analytical work was then carried out over 2006/2008 and is now pursued notably by a dedicated expert subgroup of the International Network on Financial Education. This work should lead to the development of tailored international guidelines that can help policymakers and practitioners.
I am particularly pleased to announce that a financial education component will be included in the Programme for International Students Assessment (PISA) for 2012. This programme is now conducted in more than 65 countries. The results of the 2012 PISA exercise should provide another impetus for countries and their government to introduce financial education as a component of the school curriculum and devote the time and resource it deserves.
I would now like to refer to vulnerable groups, which exist in all countries, developed or not. These groups have little or no access to appropriate financial and advisory services and this is exacerbated by their negligible financial awareness and literacy. This is not tolerable. We need to fix this. There is an urgent need to improve their financial literacy in order to better integrate them, not just into the financial system, but also the economy as a whole. We are working on designing tailored programmes to address this.
A few words on something very important for all of us: our pensions. The crisis has generally heightened anxiety about pensions and underlines the importance of informed decisions by individuals on saving for retirement. This concerns especially workers with defined contributions schemes, who fully bear longevity and investment risks and can find themselves with low benefits or even nothing when retiring. The OECD will continue to develop public awareness and education on pension issues and also promote adequate regulation to protect future pensioners. I am pleased to announce today that the OECD Council should soon endorse a revised set of the OECD core principles for the regulation of private pensions.
Mr. Darcos, Dear guests
Awareness of the need for financial education is gaining momentum. It is becoming acknowledged as an essential pillar of a sound and sustainable financial regulatory and supervisory framework.
The OECD will continue to strengthen its efforts to deepen international policy dialogue and cooperation on this fundamental issue notably through the work of its dedicated committees and its International Network on Financial Education. It will also do so through more international analysis, principles and guidelines in areas that need it, as well as methodologies to design, develop and further improve financial education programmes worldwide.
Thank you very much. I wish all a very successful event and discussion.
Third meeting of the International Network on Financial Education