Remarks by Angel Gurría
Paris, France - 18 May 2018
(As prepared for delivery)
Dear Minister Padoan, Distinguished Guests, Ambassadors, Ladies and Gentlemen:
I am delighted to welcome you to the OECD Global Financial Literacy Excellence Centre (GFLEC) High-Level Global Symposium, to discuss “Effective Financial Education for Sustainable and Inclusive Growth”. Today we celebrate an important milestone in our journey to advance financial literacy — the 10th Anniversary of the OECD International Network on Financial Education (INFE), which is now 120 members strong!
Our discussions today will benefit from the perspectives of three financial literacy champions:
We are delighted to host them to discuss the vital challenge of promoting financial literacy.
Financial literacy is an essential life skill. It lays the groundwork for many important, life changing decisions, whether it’s evaluating a job contract, purchasing a first home or managing retirement savings.
It is also a key tool to address inequality. PISA 2015 data show that 15-year-old students with high proficiency in financial literacy are more likely than those with low proficiency to be oriented towards saving, to expect to complete a university education, and to work in a high-skilled occupation.
As shown by last year’s G20 OECD INFE report ─ Ensuring Financial Education and Consumer Protection for All in the Digital Age ─ financial literacy is also critical for managing the opportunities and risks of rapid financial digitalisation.
The good news is that many of our countries are making progress. The OECD’s PISA Results on Financial Literacy ─ released last year ─ found that in China, for example, in the provinces of Beijing, Shanghai, Jiangsu and Guangdong, one in three students performed at the highest level in financial literacy, compared to the OECD average of one in ten.
There were also standout performers in the OECD: the Flemish Community of Belgium and the seven participating Canadian provinces showed impressive results. Australia and the Netherlands also performed above the OECD average. Italy, in particular, showed significant improvement compared with its 2012 performance.
I would like to thank Pier Carlo for ensuring that Italy continues to progress, and congratulate him for Italy’s move to join the majority of G20 countries and many others in charting a clear path for financial inclusion based on the OECD’s High-level Principles on National Strategies for Financial Education.
We have come a long way, but we are not out of the woods yet. We still have a mountain to climb in ensuring financial literacy for all.
A recent G20-OECD-INFE report, Adult Financial Literacy in G20 Countries found that only half of adults in G20 countries achieved the minimum target score of at least six out of nine financial behaviours required to improve financial well-being.
The study also found that some of the weakest areas of financial literacy and behaviour relate to choosing financial products, showing that only 15% of people seek independent advice or information to make an informed choice.
Evidence from the OECD INFE International Survey of Adult Financial Literacy Competencies in 2016 also showed that across all participating countries and economies, two in five respondents had not saved in the last 12 months and more than one in five had borrowed to make ends meet. These worrying trends will be the focus of our discussions in our opening session, drawing on the particular experience of central bankers.
The OECD will continue to work closely with the G20, with policymakers and stakeholders to address these challenges and ensure that financial literacy is a priority. Let me highlight three key areas going forward.
First, we need to understand better the relationship between financial literacy and financial stability. Widespread over-reliance on credit, high household indebtedness, a lack of understanding of the implications of changes in economic policy, and a tendency to “follow the herd” are just some of the issues that can lead to significant financial and economic difficulties.
Second, we need to redouble our efforts to ensure that nobody — no group, no society — is left behind. Currently, socioeconomically disadvantaged students are about twice as likely as advantaged students to be low performers on average in the PISA 2015 financial literacy survey. Students with an immigrant background score 26 points lower in financial literacy, on average, than native-born students of similar socioeconomic status. This is shocking! We need to design targeted policies that recognise and understand the differences between people and seek to address the gaps in outcomes.
Third, we need to reflect on policies to support citizens in the new digital financial environment. For example, the proliferation of crypto-currency offerings calls for policies to protect and inform investors’ decisions. We explored these issues in the G20 OECD INFE report on Ensuring Financial Education and Consumer Protection for All in the Digital Age and the OECD has been working with the Argentinian G20 Presidency on developing policy guidance in this area.
Ladies and Gentlemen:
Financial literacy has traditionally been part of common wisdom: parents taught their children that “a penny saved is a penny earned” and that “money doesn’t grow on trees”. These proverbs remain wise, but financial literacy is also about a lot more than that, it’s necessary to understand online banking, compound interest, loans and mortgage conditions, retirement and investment options as well as job offers.
You cannot thrive in this world without sound financial literacy, so our job is to ensure that no one is left behind, and everyone, regardless of age, nationality or socioeconomic status is given the opportunity to acquire and develop these skills.
Let’s move forward today, together. Let’s design, develop and deliver better financial literacy policies for better lives. Thank you.
OECD work on Inclusive Growth