Durmuş Yilmaz: Financial education and awareness - challenges,
opportunities and strategies
Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at
the International Conference on Financial Education and Financial Awareness: Challenges,
Opportunities and Strategies, Istanbul, 10 March 2011.
* * *
Distinguished Minister, Esteemed Participants, Esteemed Guests and Members of the
Press,
Welcome to our conference on financial education and financial awareness. As you know,
these concepts have progressively come into prominence in both developed and developing
countries in recent years. After a brief conceptual introduction, I will continue my speech by
talking about the financial education in Turkey and efforts of the Central Bank in this respect.
Distinguished Participants,
Financial education has always been an important concept in terms of allowing individuals to
manage their budgets, arrange incomes and expenditures, manage their investments and
savings effectively, and protect themselves from possible losses. With the increased variety
and complexity of financial products in today's world, this issue is becoming even more
important for both individuals and the financial system. On the back of globalization, the
liberalization trend in economies, the easing of restrictive regulations in the financial sector
and the liberalization of capital flows at international level since the early 1980s, more and
more individuals participate in financial markets as investors in many countries, primarily in
developing ones. In this framework, financial education assumes greater importance in terms
of minimizing financial risks for those who do not have sufficient experience of capital market
instruments.
Financial awareness supports a more rational decision-making process for individuals by
improving their literacy against financial risks. Increasing financial literacy will contribute to
the more efficient functioning of financial markets, enhancement of financial stability and
consequently the social welfare by increasing productivity in the overall economy. Therefore,
financial education assumes importance not only for individuals but also for giving depth to
the financial system and improving market efficiency. Parallel to increased financial literacy,
the volume and variety of information sought by individuals from financial institutions will also
increase. This will, in turn, lead to more transparency in financial markets. Besides,
consumers' demands for products and services that meet their needs will enable the
development of creative, innovative and competitive financial products and services in
financial markets. Moreover, financial education will lead to an increase in the individuals'
propensity to save and create a more efficient social security system. Higher rates of savings
will have favorable effects on investment and growth and contribute to economic
development and financial stability.
I would like to especially underline that financial education is not an abstract concept. As a
matter of fact, we clearly witnessed the close relationship between financial education and
financial stability in the recent global crisis. I believe that the awareness created by this crisis
can be interpreted as an opportunity, as highlighting financial education will be beneficial for
policy-makers, individuals and financial markets.
In Turkey, many institutions carry out projects with regard to financial education as a part of
their responsibilities. In order to get the expected benefit from financial education programs,
individuals' financial education needs that arise in different phases of their lives should be
well identified. It is of great importance that financial education programs are devised in a
way to meet these needs; and the effects of these education programs are assessed in order
to reshape future needs accordingly.
Due to the relationship between financial stability and financial education I have just
mentioned, the Central Bank of Turkey attaches special importance to the issue of financial
education as other central banks do. As you all know, the CBT Law lays down the primary
objective of the Central Bank of Turkey as maintaining price stability; whereas taking
measures to ensure stability in the financial system are stated among the main duties. In this
respect, the CBT considers financial education from the viewpoint of financial stability. With
our biannual Financial Stability Report and other studies and announcements that we share
with the public, we strive to raise awareness as regards the financial risks borne by
households.
Meanwhile, we have recently accelerated our efforts on the international platform regarding
this issue. The CBT is a member of the International Network on Financial Education (INFE)
established under the auspices of the Organization for Economic Cooperation and
Development (OECD), one of the leading organizations for financial education. Within the
scope of this platform, the CBT became one of the fifteen members of the National Strategy
on Financial Education subgroup, which was established in 2009. Similarly, the CBT applied
to join the studies of the Financial Inclusion subgroup under this platform (established in
February 2011) and also for membership in the Task Force on Financial Consumer
Protection that was established at the OECD.
The Central Bank of Turkey also contributes, via data collection and surveys, to international
studies on financial access. Within this framework, the CBT supports studies carried out by
the Consultative Group to Assist the Poor (CGAP) conducted in collaboration with the World
Bank. Moreover, the CBT - along with other related public institutions - contributes to the
efforts of the Global Partnership for Financial Inclusion (GPFI) initiated by the G-20 to
enhance the exchange of information and cooperation regarding financial access.
Having said these, I believe that the CBT study entitled "Access to Financial Services and
Financial Education in Turkey and Around the World" will become an important reference
regarding this issue. The booklet is now accessible on the CBT website as well as in the
Conference CD and is will be in print soon.
In the last part of my speech, I would like to mention some specific points regarding financial
education within the framework of this Conference.
In the first session, we will discuss the relationship between financial education and financial
stability and contribution of financial education to the functioning of the financial system.
Then we will move on to the impact of the recent global financial crisis on the rising issue of
financial education and financial awareness. Taking into account the importance of benefiting
from other countries' experiences while formulating national financial education strategies
and programs, in the second session we will focus on financial education practices around
the world. I believe that this session will yield very useful inferences. In the third session, we
will listen to experiences of those countries that have made significant progress in designing
their national financial education strategies and we will learn their methods, challenges and
suggestions for solutions as well as the outcomes they obtained. On the second day of the
Conference, we will elaborate the current efforts on financial education in Turkey and the
roles and responsibilities of all relevant stakeholders. At this point, the cooperation between
institutions will play an instrumental role in designing national strategies. The implementation
of education programs is as important as designing financial education strategies and this
issue will be thoroughly discussed in the sixth and last session of the Conference.
As the Central Bank of Turkey, we strongly believe that the significance of financial education
is far beyond its conceptual meaning and we attach great importance to collaborating with
national and international institutions in this area. We believe that this Conference with the
valuable contribution of the Capital Markets Board will be a milestone.
I wish the Conference every success and thank everyone who has made a contribution.