Luís Máximo dos Santos: Financial inclusion and education for
Central Banks of Portuguese-speaking Countries
Opening address by Mr Luís Máximo dos Santos, Vice-Governor of the Bank of Portugal, at the
3rd Meeting on Financial Inclusion and Education for Central Banks of Portuguese-speaking
Countries (BCPLP) , Lisbon, 6 July 2017.
* * *
As prepared for delivery.
1. Welcome to Portugal, to Lisbon and to Banco de Portugal. Welcome to the 3rd Meeting on
Financial Inclusion and Education.
I would like to warmly greet the central banks of São Tomé and Príncipe, Timor-Leste, Brazil, the
West African States, Cabo Verde, Mozambique, Angola, as well as all the distinguished
members of each bank's delegation. Your presence honours us all, thank you.
It is also my pleasure to greet every one present today and to welcome for the first time the
Alliance for Financial Inclusion, represented by its Executive Director.
2. These meetings were started not a moment too soon, in 2013, resumed in 2015 and today we
gather to open the third. It is not only our privilege but also a pleasure to host this event.
In fact, financial inclusion and education are increasingly seen as a priority in the international
agenda on account of their impact on the promotion of financial stability and economic
development.
These meetings on financial inclusion and education show how important it is for central banks
of Portuguese-speaking countries to share their knowledge and experience of initiatives to
promote financial inclusion and education.
The wealth of experiences and best practices shared at the first two meetings led to the
publication of reports on the initiatives undertaken to promote financial inclusion and education in
Portuguese-speaking countries. I am certain that the past two years have brought us many
developments on this subject, in the various countries, which will be presented and analysed
today and tomorrow, meriting a third report to be published with the conclusions of this meeting.
Every time, these meetings delve deeper into the topic under analysis:
1. At the first meeting, in 2013, we took stock of what part central banks should play and of the
best international practices to promote financial inclusion and education;
2. At the second meeting, in 2015, we debated financial education in schools, distance learning
and the importance of partnerships for the success and sustainability of financial inclusion
and education policies.
In this third meeting, besides taking an in-depth look into financial education in schools, a
strategic pillar of education for population in general and for young people in particular, new
topics will be discussed, such as the assessment of financial education initiatives and education
to ensure the proper use of financial products and services through digital channels.
I would like to underline that one of the greatest assets of sharing our experiences at these
meetings is the diversity of approaches. Though we pursue a common goal, to increase people's
financial literacy and inclusion levels and ultimately their well-being, the path to reach that goal
may - and certainly will - differ. Therefore, it is important for us all to learn about different
approaches, take advantage of the diversity of experiences and adapt them to each country's
economic, financial and institutional background.
The debate on these topics is quite stimulating on account of their complexity, but there is also
an especially gratifying side to it because we know how these initiatives can improve the lives of
real people. These would be more than enough reasons to look forward to two excellent days
working together and sharing. But there is another reason that makes it even more pleasurable:
we will do so in Portuguese, a language that instantly brings us closer and reminds us that our
countries are players in a global world that is also expressed and felt in the rich variations of a
language shared by us all.
3. Financial inclusion is an essential component of social inclusion, since it leads to a more
efficient management of personal finances, and gives people conditions to manage a family
budget better, use of payment means more efficiently, make savings using adequate products
and be safer when applying for a loan.
In fact, one must not forget that financial inclusion also helps fight inequality, a paramount issue
in today's economies. Mario Draghi, President of the European Central Bank, underlined a few
days ago when he met with students at a university in Lisbon that inequality is a highly
destabilising phenomenon for all areas of society, including financial stability.
Traditionally, major barriers to financial inclusion are connected to geographical proximity factors,
such as low density of credit institutions making it difficult to access the formal financial sector.
These barriers lead to the existence of an informal sector that provides competing financial
products and services, which though unregulated are more easily accessible. Other exclusion
factors are high costs of financial services in the formal sector or the credit institutions' failure to
offer products that meet the needs of consumers with low income / low levels of education.
Yet, the fact that financial services are increasingly digital brings about new opportunities for
promoting financial inclusion, overcoming some of these obstacles, since digital channels make
access easier and less costly. The sale of financial products and services using digital channels
makes them accessible to people, even if they are not close to the service providers, as such
products are generally simpler and more standardised.
However, digital channels also come with new risks. Starting with risks related to secure access
and use of digital channels and the need to take adequate action to prevent fraud. Then there is
the risk of a less considered purchase of financial products and services, for instance borrowing
without due clarification of associated financial conditions and of the consequences of default. In
addition, digital channels are not a solution to include the most vulnerable groups, such as elderly
people, who generally find it more difficult to use technology.
Therefore, though digital channels open up new opportunities, we must take into account the new
risks. And likewise recognise that many of the traditional challenges of promoting financial
inclusion remain the same. Which also happens with the need for the financial inclusion strategy
to be based on three pillars:
1. Policies to promote financial inclusion;
2. Appropriate regulation of financial products and services; and
3. Initiatives to increase people's financial education.
4. Financial education is essential for the proper financial inclusion of people that presently have
no access to the financial system and, particularly, to a bank account. Financial education gives
people basic knowledge and raises awareness for the need to be prudent when accessing and
using bank products. One of the challenges of providing education for financial inclusion is to
reach the audience that actually needs it, generally the more vulnerable population groups. One
example in Portugal is the challenge posed by promoting minimum banking services, which
consist of a basic bank account and basic payment services. Institutions are required to provide
such minimum banking services for a lower cost, but people in general are unaware of their
existence, and even more so, those that are excluded from the financial system and who could
benefit the most from it.
Naturally, financial education is not only important for those excluded from the financial system,
but also for people in general, as it promotes a responsible and efficient use of financial products
and services, raising awareness of advantages and risks associated with the products and
services provided by credit institutions and of financial consumers' rights and obligations. Greater
understanding of financial products and of the financial system empowers people to make
financial decisions and choices that meet their needs better.
The promotion of financial education faces important challenges, one of them being, as I
mentioned before, the challenge of reaching everyone, when our population is not homogeneous
and has diverse features and needs. Therefore it is very important to define, from the start, the
topics and means that best reach each population group, to choose messages that are correctly
understood by the target audience and to find the right partners to work that audience. Another
side we cannot ignore is the cost of financial education initiatives, which is why we need to make
a gradual approach and to assess the initiatives to find out how effective they are, so as to bet on
the most suitable education initiatives.
5. Banco de Portugal has committed itself to promote financial education for several years now.
A few years back, at international fora, we debated the importance of central banks and financial
regulators becoming involved in financial education initiatives. This is no longer an issue, as it is
widely accepted that it should be so. More financial literacy helps citizens choose more suitable
financial products, thus contributing to maintain financial stability and sustained economic
growth.
Nine years ago, Banco de Portugal launched the Bank Customer Website, marking the beginning
of a more effectively structured strategy to promote financial education. Since then, it published
booklets and leaflets with information on banking products and services and set up countless
financial education workshops, supported by the bank's regional branches.
In addition, teaming with the other financial supervisors, Banco de Portugal launched the National
Plan for Financial Education, which since 2011 has had many initiatives that will certainly be
referred to specifically throughout this meeting. Such initiatives are carried out using partnerships
with public and private entities, involving schools, companies and local authorities, among other.
6. We would like these two days to ensure that everyone's interest is kindled for the fourth
meeting. At Banco de Portugal, besides sharing our experience, we are all very interested to
learn about recent developments in your countries in the initiatives to promote financial inclusion
and education, so that we can all make the best use of the experiences to be shared here. It has
always been our belief that by joint reflection and cooperation we could reach our goals more
effectively.
Allow me a final word to thank all the effort put in by all the staff of Banco de Portugal who worked
to make this third meeting a reality. Among them I wish to give special thanks to the Banking
Conduct Supervision Department, herein represented by its Head Ms. Lúcia Leitão, which put its
heart and soul into this event.