Financial literacy a key element for a well-functioning economic system

Financial literacy can be seen as a key element for a well-functioning economic system and thus as a prerequisite for sustainable economic growth and financial wellbeing of individuals, Governor of the Central Bank of Cyprus, Constantinos Herodotou has said.

A press release circulated Friday by the Central Bank says that the Governon delivered a speech recently at a Cyprus Economic Society seminar titled ‘The Significance of being Financially Literate and National Strategies for achieving it’.

Herodotou said that as more individuals operate prudently and comprehend the workings and functioning of the financial system, including how to use its services and products appropriately and efficiently, the broader economic system and society, as a whole, benefit.

He referred to the establishment of the Ad-Hoc Committee to prepare the National Strategy for Financial Literacy in Cyprus, pointing out that recognising the seriousness of the issue, state authorities around the globe have taken actions in order to enhance financial literacy among the wider population.

According to the Governor, the ongoing work of the Committee is noteworthy and it includes an evaluation of the scientific bibliography on financial literacy, as well as a review and assessment of international initiatives for the promotion of financial literacy.

He also referred to a survey carried out in 2018 by the CBC which confirmed, among others, the rather worrisome result that financial knowledge amongst young persons of age 18-29 years in general is rather low.

Herodotou also said that schools as an environment conducive to learning, play an essential, if not the most important role, in the formulation of a National Strategy in order to address the problem of financial illiteracy early on in an individual’s life.

The Governor also said that the  participation of private and not-for-profit stakeholders in the National Strategy’s implementation will be further supported by the development of a code of conduct and prior agreement to specific protocols.  He also referred to the need for proper governance structure for the body that will undertake the implementation of the National Strategy on financial literacy.