About

What is the purpose of the Gateway? 

What is financial education?

Why financial education?

What is the OECD Project on Financial Education?

What is the purpose of the Gateway?

The gateway is established by the OECD to fulfill needs expressed and gaps identified by key international stakeholders in the financial education area, including:

• Sound and comprehensive data, research, studies and information on financial education issues and programmes worldwide
• A reliable source of dissemination and comparison of this information
• A tool to exchange information, experiences and best practices on financial education between governmental representatives and key stakeholders

In this respect major financial education stakeholders are invited to provide further information on their programmes/initiatives or on research work relative to financial education [Your feedback].

Following–up the OECD 2005 Recommendation on Principles and Good Practices for Financial Education and Awareness, the Gateway will also facilitate the international co-operation on financial education.  In this respect, it contains a secured area (with a dedicated username and password) to promote and support exchange of views through the International Network of Governmental Experts on Financial Education, from any public institutions from OECD and non-OECD countries [how to join]. 

The gateway will also be supported and enriched by informative tools such as a regular newsletter highlighting worldwide news and recent developments on financial education and the organization of an annual global forum and targeted and tailored country/regional events to address particular needs and interests on financial education issues [conferences]. Regular meetings of network members will also be organized.

What is financial education?

The OECD has developed a widely acknowledged comprehensive definition of financial education encompassing various steps and concepts from financial awareness to financial literacy and capability:

Why financial education?

• the importance of financial education 
• the worryingly low level of financial education 
• the negative adverse effects 
• the benefits of Financial Education 

The importance of financial education

The importance of financial education has increased worldwide for several reasons:

• Increasing transfer of risks to households which are more directly responsible for critical financial decisions for their future wellbeing.
  - Decline of public welfare policies and social corporate programmes
  - Growing range of risks affecting  households at macro and micro levels
  - Increased life expectancy
  - Shift from Defined Benefit to Defined Contributions Pensions schemes
  - Enhanced individual responsibility in financial and insurance  risk management
  - More households investing more income in financial assets
• Development and sophistication of financial markets
  - More complex products
  - Increased supply of financial products
  - Overload of financial disclosure
  - Recent financial crisis in some countries

The worryingly low level of financial education  

A number of surveys have been conducted in OECD and emerging economies [link to the section on assessing the needs] based on various criteria. All indicate a low level of financial awareness, literacy, capability and responsibility of consumers with the more vulnerable groups more affected and in particular:

• Low level of financial understanding
• Underestimation of needs
• Lack of self-awareness of  low financial education
• Vulnerable and  disadvantaged groups
• Little shopping around
• Resilient passive behaviours

The negative adverse effects of consumers’ low level of financial literacy

It has been demonstrated that low level of financial literacy is one of the factors that  can result in various non desirable effects for households including:

• Massive rise in consumers’ indebtedness in many countries (recent suprime crisis)
• Low level of savings for retirement
• Mis-selling for particular complex products
• Undercoverage of risks with severe consequences
• Higher costs for disadvantaged groups
• Lack of trust in financial institutions

The benefits of financial education

Being a public good, financial education can generate a “win-win” situation for all interested parties:

• Benefits to individuals: greater confidence in making financial decisions and improved financial situation (i.e. financial inclusion and improved financial access, adequate retirement income and reduced risk of over-indebtedness). Also benefits the development and growth of small and medium enterprises.
• Benefits to financial industry and financial markets: higher level of financial literacy increases the demand for financial products and reduces information asymmetries. It also promotes market transparency, competitiveness and efficiency.
• Benefits to regulators: financially literate consumers might help to ease supervisory activity and allow for lower levels of regulatory intervention.
• Benefits to governments: better financial education might result in more successful pension and health care reforms, including through greater private saving rates, help reduce the risk of future public expenditure pressures, and in general contribute to economic stability and development.