“Investing in education yields the highest-return rate from a social standpoint”

“Every day I become increasingly convinced that investing in education and knowledge is the investment with the highest return rate, also from a social standpoint,” said José Manuel González-Páramo during his address. In his opinion, financial education is important due to three factors. First of all, because of its universality, as it “affects everyone:” from the people that receive it - which could be anyone, children, teenagers or adults - to the players responsible for disseminating and helping improve financial skills, which are many: public authorities, ministries and public offices, regulatory commissions, private institutions or the academic world.

The second factor he referred to has to do with the fact that money is the “number one cause of stress” across the world. Financial education helps people better understand and control their financial situation, as well as to keep responsible savings and borrowing levels. “In short, it helps us improve our financial health,” he underscored. “Money-related stress would decline considerably with a minimum level of financial education and external support from other elements, such as the financial system and digitization.”

Finally, González-Páramo pointed out that financial education is important because its benefits ripple beyond the personal or business spheres, and that higher levels of financial education have an indirect impact on the stability of the financial system. Also, from a macroeconomic point of view, higher education levels in society contribute to boost investment, diversification and innovation.

Disruptive changes in society

José Manuel González-Páramo said that financial education is becoming especially relevant today, at a time when we’re seeing disruptive change everywhere, not only in the tech world, but also in demographics, migration or the weather. In this context of profound change, he noted three defining factors that condition financial education. First, socioeconomic changes, including per capita income growth (which leads to greater savings capacity), the steady rise of debt levels in the past few decades and the increase in life expectancy and its impact on pensions.

In second place, he noted that consumers today have access to a broad variety of financial products, many of which require having a certain level of knowledge in order to able to understand and choose the one that best fits their needs. Finally, he mentioned digital transformation, which is bringing a fundamental shift to behavioral, consumption and savings patterns in society. “Millennials are transitioning into the job market and are a bit different from digital migrants in terms of what they demand, how they compare products or their degree of loyalty to financial institutions”. Also, on the supply side, he made reference to the arrival of a slew of new players, such as fintechs.

For BBVA’s Executive Board Member, this juncture is forcing everyone to act upon those areas where our impact can be greater. “In 2017, when we had already built a wealth of practical expertise in the delivery of financial education programs, we decided to create a center for financial education, to raise awareness about its importance and promote research on this field; and a platform to bring together the most relevant studies and publications on the topic authored by academic institutions or by public and private enterprises, and the best practices,” he noted in reference to the Center for Financial Education and Capability.

Since the Center launched in 2017, it has published 209 studies and 113 best practices by some of the world’s leading experts on the matter. Also, the web platform already has over 4,500 active subscribers that interact with the center.

Also during the first day of the Edufin Summit, Flore-Anne Messy, head of the Financial Affairs Division of the OECD, took to the stand to talk about digitization and financial health.

To watch a live stream of the Edufin Summit, please follow link.  Three round-table discussions are also scheduled to take place during the first day: ‘Financial education for everyone: how to avoid an exclusive digitization’, ‘The world map of digital financial education’ and ‘Financial skills for the new age: from the abacus to the chatbot.’

The session will conclude with a series of presentations about the digital tools that BBVA has developed to promote financial education and bring the age of opportunity to everyone.