PROJECT M
Q&A

Flore-Ann Messy

Flore-Ann Messy is responsible for the OECD financial education project. She argues that improved financial inclusion, the aftermath of the financial crisis and the transfer of financial risks to individuals are among the main drivers for financial literacy

Flore-Ann Messy

Flore-Ann Messy is responsible for the OECD financial education project. She argues that improved financial inclusion, the aftermath of the financial crisis and the transfer of financial risks to individuals are among the main drivers for financial literacy

Financial literacy is obviously important, so why is it a relatively new topic?

I’d say that concerns about financial literacy first emerged in the 1980s due to the shift from defined benefit to defined contribution pensions, especially in Anglo-Saxon countries. The 2008 financial crisis highlighted further issues. However, the main global driver is that while more consumers now have access to financial products in developing countries, they have little knowledge of financial issues.

Could you explain the difference between financial literacy and financial education?

That’s an easy question. Financial education is a process that includes school education, as well as other forms of information, advice and “edutainment” to reach out to the adult population. This could be workshops for adults or awareness campaigns. Financial education is the process that will lead to improved levels of financial literacy – or financial capability, as some people refer to it.

What skills would you expect people to have if they are to be empowered by financial literacy?

A mix of financial knowledge, attitude and behavior. A person would understand concepts such as simple and compound interest or risk diversification, be able to control a budget, and also have positive attitudes towards money and financial issues.

What are the consequences of financial illiteracy?

They can be severe. In some countries we see social and financial exclusion, but it is a drawback for consumers everywhere. There is a transfer of risk going on from governments to corporations and then from corporations to individuals. By risk, I mean longevity risk, risk related to healthcare costs and loss of employment. Individuals cannot carry this risk without financial literacy.

If financial education is the key to improving financial literacy, who should drive this?

At the OECD, we’re pushing for governments, including regulators and the education system, to be at the forefront. This is for a simple reason: we’re speaking about changing behavior and attitude, so we want financial skills developed in young people, especially through schools. Other stakeholders – employers, trade unions and the financial industry – have a role with regard to adults, especially if you believe financial literacy is important in ensuring an adequate retirement.

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