Dr. Luís Máximo dos Santos, Vice-Governor, Banco de Portugal, senior officials from AFI member institutions, speakers and participants, colleagues from Banco de Portugal, AFI team,

Ladies and gentlemen, a very good morning, good afternoon, and good evening to all of you.

It is my pleasure to welcome you to this 3-day Member Training on Designing National Strategy for Financial Education and its Implementation and Monitoring. I would like to extend my sincere appreciation to Banco de Portugal for collaborating with us for this event. Banco de Portugal and AFI have together delivered three Member Trainings in 2017, 2018 and 2019 on Financial Education to Lusophone countries as part of the Memorandum of Understanding (MoU) signed between monetary authorities and financial regulators from seven Portuguese speaking countries and AFI in July 2017.

Given the success of those trainings and the excellent feedback received, we are now pleased to extend this training to the global AFI network to enable the larger member base to benefit from the experience and expertise of Banco de Portugal. This extension is also relevant as capacity building on financial education has been identified by members across the network as one of the top three policy areas. This event also contributes to AFI’s 3D initiative – Developing-Developed Country Dialogue – that builds knowledge partnerships between member institutions in the AFI network and regulators from advanced economies.

AFI’s 3D workstream is being taken forward by our newly launched European Representative Office in Luxembourg, which is hosted by the Ministries of Finance and Foreign and European affairs of Luxembourg.  The launch of this new office signifies an important milestone in AFI’s collaboration with policymaking peers in advanced economies, particularly in Europe, toward shared policy objectives and learnings. In addition to advancing developed-developing country dialogue, AFI’s European Representative Office will enhance and expand services to AFI member institutions in the Europe and Central Asia region. The office will help deepen peer learning with Standard Setting Bodies and engage a broad ecosystem of technical partners and stakeholders in Europe and globally. The MOU such as the one with Banco de Portugal was the first of its kind and gave us a good start towards building relations with advanced economies. Over time, we have seen increasing recognition of the mutual benefit to both developing and developed economies from a shared learning platform. The local presence in Europe now brings further opportunities to formalize these knowledge partnerships.

For several years, financial literacy, and at a broader level, financial education has been a major focus area for stakeholders working to enhance financial inclusion in their countries, regions or at the global level. Financial literacy at product and service level helps to empower customers especially those who are financially excluded or are more vulnerable like women, senior citizens and youth. It is also believed that financial education when delivered to the general population helps to make them financially capable over a period of time enabling them to understand and manage their personal finances and that of their households. The challenge of financial inclusion nowadays is not only to bring unbanked into the formal financial system, but challenge is also to keep people within that system. Financial education is key in serving this purpose.

At the end of the Global Policy Forum 2019, by adopting the Kigali Statement, the AFI network renewed its commitment to focus on specific policy interventions that accelerate financial inclusion of disadvantaged groups. This is expected to further complement the efforts made by member institutions to support financially excluded groups as part of Maya Declaration commitments. In the light of these commitments, the subject of financial education of these excluded groups assumes prime importance for us.

The CEMC Working Group has also worked consistently through various policy initiatives and knowledge products to elevate the importance of National Strategy for Financial Education in member countries. AFI member institutions have benefitted from the development of the Financial Capability Barometer framework, which is AFI’s tool of assessing the level of financial capability of individuals in a country by reflecting the objectives and measurable targets of a National Strategy for Financial Education.

While digital financial services hold immense potential to solve the global problem of financial exclusion, there is a growing threat of digital divide too. There are several reasons for this but one of the most prominent factors contributing to digital divide is low digital and financial literacy of people. Thus, with the increasing deployment of digital technologies in the financial inclusion space, there is a need to invest in building digital financial literacy of the population. Women, youth and other disadvantaged groups are at the greatest risk of digital divide. The efforts towards building digital financial literacy must take cognizance of the barriers faced by these segments to design suitable content and messages. Digital drive is indeed the way forward to reach out to those financially excluded and ensure that no one is left behind.

The agenda of incorporating financial education in school, college and university curriculum needs to be taken up with greater conviction by governments and policy makers. Topics such as understanding basic financial principles, interest calculations, managing personal finance, creating a budget etc. are some of the topics for which the foundation must be laid in schools. Continued and structured financial education at all levels of education goes a long way in building societies where people are more capable and competent to plan well for their retirement or any exigency. They are able to demonstrate sound financial behavior during their economically productive life phase and are able to make informed financial choices. At a macro level, a financially capable population helps to achieve financial stability in the country and can contribute to sustainable and economic development.

The discussion on financial education, financial literacy, particularly digital financial literacy, has come to the forefront even more, since the onset of the current pandemic. As COVID-19 unleashes havoc on economies, big and small, it has brought to the fore a stark reality of inadequate financial education among the general population, even in most advanced economies. The pandemic has highlighted the need that people from all segments and class of the society, irrespective of their occupation and livelihoods need financial education and literacy since early age to be able to deal with financial and economic uncertainties. As economies strive to build back better, financial education and financial literacy need to occupy the centre stage of the recovery efforts.

In mid and low-income economies, the importance of financial education and financial literacy assumes much greater significance due to the fact that a significant proportion of their population are not only poor but may also be illiterate or semi-literate. While financial inclusion initiatives aim to bring these sections of the population into the fold of formal financial sector, it is this sector which is highly likely to suffer from financial frauds, unfair practices and uninformed decisions.

A national financial education strategy must therefore aim to build a nation-wide financial education infrastructure that provides equal opportunities to all children, youth, women, adults and senior citizens from all walks of life. The strategy must also lay great focus on the financially excluded, illiterate or innumerate segments of the society such that they understand financial matters well, understand the myriad financial products and services that are being made available to them, they are able to well understand the financial assistance programmes of the government, and are able to make informed choices about these products, services and programmes.

This program has been designed to provide unique value and learnings to all participants. We are looking forward to learning from the deep experience of the Bank of Portugal, which has conducted ground-breaking work, fueled by the recognition that the first steps of financial education start in schools. Through an integrated and coordinated vision, Portugal has been able to bring together all stakeholders to work for a common national goal. The strategy has successfully targeted different segments of the society including the vulnerable, senior citizens, youth, and small businesses. Please join me in congratulating Banco de Portugal for this outstanding achievement.

In a similar light, AFI members have also led the way in advancing financial education in their jurisdiction through innovative policy approaches. We look forward to sharing some of these lessons with our peers from advanced economies.

Ladies and Gentlemen,

Mindful of the tremendous mutual learning benefits that the 3D platform provides, AFI members in September of this year approved the incorporation of Observer Status for advanced economies. This milestone will pave the way to a more vibrant and systematic knowledge exchange on topics of shared policy priority. We look forward to similar opportunities of knowledge sharing with Bank of Portugal in the coming year and beyond. Learning from one another will be instrumental in our collective efforts toward inclusive and sustainable economic recovery, going forward.

I wish you all very productive sessions during these three days.