Speech by Her Majesty Queen Máxima of the Netherlands, Symposium Financial Resilience throughout life, Amsterdam
Queen Máxima is the UN Secretary-General's Special Advocate for Inclusive Finance for Development (UNSGSA).
Señor Gurría, Mr Dijsselbloem, Mr Knot, ladies and gentlemen,
Welcome to Amsterdam!
As you may know, this city is an important center in the history of modern finance. It is home to what is regarded as the oldest stock exchange in the world and the birthplace of the first multinational corporation: the Dutch East India Company, founded in 1602.
Amsterdam was also the home of one of the earliest promoters of financial literacy: John Adams. You all know him as the 2nd President of the United States. But before he became President, he was US ambassador to the Dutch Republic, and lived here in Amsterdam.
John Adams was one of the first people who saw the need for financial education. In a letter to Thomas Jefferson – written in 1787 – he illustrated the importance of financial resilience throughout life in glowing terms.
He wrote: “All the perplexities, confusions, and distresses in America arise from downright ignorance of the nature of coin, credit, and circulation.”
Today, 230 years later, we have come a long way in tackling this ignorance. You are all working very hard to promote responsible financial behaviour in your countries. International organizations like OECD, and specifically INFE, but also the G20, the World Bank and the United Nations are pulling their weight together. As the UN’s Secretary General’s Special Advocate for Inclusive Finance for Development, I have the privilege of working with you all to help provide people with the financial tools and skills they need to improve their lives and secure their future.
My focus, like yours, is development. We know that people with access to financial services and financial skills stand more firmly in life. They are better prepared for risks and are able to take advantage of opportunities.
During my working visits to countries around the world, I meet many people who are living proof of this.
Like the members of the Uniones de Crédito y Ahorro in Peru, the UNICA’s. These are small community groups whose members are helping each other by pooling savings and discussing financial planning and household management. Parents even bring their children into the UNICA so that they can grow up learning the discipline of saving.
Or the farmers I met in Ethiopia, who produce food for schools in their district, receiving training and coaching from the FAO. Each time, with just a little help, they can reach broader markets, step by step.
I am impressed by the achievements in financial education of many OECD- and non-OECD countries. India, for example, has extensive financial literacy and awareness programs for people who are not familiar with formal financial services. Local bank managers are organizing financial literacy camps in villages and small towns.
Their message and teaching methods are geared to the customers’ perception of their own environment. Like posters showing essential and non-essential expenditures.
Essential: housing, food, clothes, and ‘life cycle needs’ like education.
Non-essential: gambling, drinking, or pilgrimage costs.
Earlier this year, I was in Pakistan and met with clients of the Kashf Foundation.
Kashf focuses on enhancing the role women can play in improving the economic status of their families. The foundation offers them small loans and delivers financial education trainings about products such as savings accounts and insurance. Clients told me that their businesses and household decisions have become more effective as a result of these trainings. What does effective mean? More food on the table, better living conditions and definitely less debts.
These are all very inspiring examples.
What we have learned in the Netherlands and many other countries, is the value of a joint effort of government, business community, academia and civil society.
Unity is strength! We know that financial education is best served by a coherent, national approach.
Currently, more than 115 countries collaborate in OECD’s International Network for Financial Education. 34 of those countries are actively implementing a national strategy for financial education. Another 30 countries are in the process of developing one.
Each country requires its own approach. It is not ‘one size fits all’. Financial education will always have to take the national and cultural context into consideration.
In South Africa, for example, many bereaved families spend large sums of money on the funeral for their deceased loved ones, and this often leaves them in debt. This sensitive issue is addressed in the national strategy in close collaboration with churches. A delicate and respectful approach!
Another effective example comes from Hong Kong, They use a model from the public health sector to reach out to vulnerable groups. It assesses which groups are at risk and could benefit from financial education programs.
So this shows that the local context is very important in designing strategies.
The Netherlands has had a national strategy since 2008. One of our more successful initiatives is the National Money Week, in co-operation with the private sector. The majority of Dutch primary schools now participates. 34 countries in Europe and over 130 countries worldwide have adopted the idea.
In addition, financial skills are going to be integrated in the new school curriculum that is currently being developed in the Netherlands. We have to 'catch them young', as they say.
Wherever we live and whatever our approach, it is always important to keep learning from experience. There is a pressing need for research to provide evidence of what works best. Countries that are leading the way in monitoring the effectiveness of financial education programs, include Morocco, Brazil and the US.
A comprehensive study in Brazil has shown that their programs improve the saving and borrowing behaviour of the younger generation. In the US, research has been done on how children absorb information. This has been very useful for adapting the manner in which children can be taught financial skills.
Having said all of this, education is not a silver bullet. Financial literacy needs to go hand in hand with access to financial services and effective consumer protection. In the EU member states, a lot has been done to improve regulation in order to better protect consumers, and I hope the European Commission can play a role in making financial education part of the equation.
Ladies and gentlemen, worldwide seven hundred million people have gained access to financial services in the last three years.
Thanks to innovations in products and delivery - like digital and mobile banking – millions are gaining access to bank accounts, insurance and many other services for the very first time in their lives. Digital services are accessible wherever and whenever you need them and they are affordable and reliable.
This of course opens a broad range of financial services to more and more people, making it easier for them to invest in themselves, their children, their home, their business and their future. We all welcome this prospect as it has a positive effect on people's lives.
But digital finance also poses risks. When money becomes less tangible, it can become more difficult for people to manage their budget. And big data has large potential benefits, but can also be used to exclude vulnerable groups from insurance or credit.
So for consumers and entrepreneurs to get the full benefit of financial products in this digital era, they must understand their choices and their rights. More than ever, people need the proper skills and financial awareness to become discerning customers who make sound decisions based on their personal situation. In short: they must be 'money wise'.
John Adams was absolutely right. We all need to understand ‘the nature of coin, credit and circulation’ to be financially resilient.
We need it to improve our lives, to strengthen our communities and to boost our economies in a stable equal way.
During these two days will be fruitful, to learn from each other, to set priorities for future collaboration and to highlight the importance of financial education even further.
I wish you every success!