Muhammad bin Ibrahim: Link between financial education, consumer
protection and financing inclusion
Closing remarks by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of
Malaysia (Bank Negara Malaysia), at the Malaysia-OECD High Level Global Symposium on
Financial Well-Being, Kuala Lumpur, 1 October 2015.
* * *
As this year's Global Symposium on Financial Well-Being comes to a close, I thought it is
appropriate to contemplate the world surrounding us. I want to make a short remark on the
link between financial education, consumer protection and financing inclusion.
Financial education, consumer protection and financial inclusion is a tractable endeavor if we
work in a collaborative manner. They are means to a noble end. Properly synchronized it
would create a sustainable growth and financial stability, a prerequisite to continuously
improve people's lives.
For the full promise of financial inclusion to be realised, financial education is a powerful tool
to equip consumers with the financial competence to manage their finances more effectively
and improve the overall well-being of individuals and households. It also means that financial
education must enable consumers to liberate themselves by equipping them with the ability
to make informed decisions thus ensuring their meaningful participation in the financial
system. The focus on strengthening the ability of consumers and businesses to use financial
services confidently and effectively must therefore be an important part of any effort to
promote financial inclusion, to make a real difference to people's lives including the two
billion adults globally, who still do not have access to financial services.
The role of financial inclusion in supporting sustainable economic growth is particularly
important now, given the global economic landscape where countries continue to search for
an engine of balanced, sustainable and long-term growth.
Financial inclusion provides low-income households with equal opportunities to save and
invest securely, borrow for productive activities and buffer against unforeseen shocks. The
utilisation of relevant financial services improves households' income and empowers them to
attain healthcare, education and social mobility, effectively reducing social and economic
inequality. Research (IMF) has shown that countries with lower inequality tend to have higher
and more durable growth. There is also evidence that access to credit spurs
entrepreneurship and job creation, and improves the economic well-being of households.
Inculcating financial capability and discipline so that all segments of society have the ability
to make sound decisions regarding saving, use of credit, investment for education and
retirement, and protection against adverse events is one fundamental way to raise financial
well-being for all. Financial literacy becomes even more important for those who are
financially less privileged. For households with limited resources, it becomes vital for them to
manage the finances even more effectively to attain financial security and improve economic
well-being.
Improving access to finance and responsible lending by the financial institutions coupled with
sensible and prudent use of credit by the borrowers are an imperative for the consumers and
for the wider economy. Being financially competent can also act as the first line of defence
against falling prey to financial scams or frauds and abusive selling practices. Indeed,
financial education initiatives complemented by fair and responsible business conduct are
not only essential complements to financial inclusion, they contribute to broader financial
stability and consequently improving the lives of members of society.
For financial educators and policymakers, the challenge ahead is a daunting one, given the
scope of the task and the rapidly changing environment. There has been no time like the
present, where the financial education and financial inclusion agenda has risen to such
prominence at the global, regional and national levels. We should seize this opportunity.
The increased visibility of financial education and financial inclusion should at least make our
work a little bit easier especially in securing top level commitment to advance this agenda
and ensure better alignment among various stakeholders.
It is in this context that the global leadership of institutions like the OECD, the Alliance for
Financial Inclusion (AFI) and the World Bank is important to sustain the momentum for
greater progress and champion the financial education and financial inclusion agenda. More
can be done collaboratively with national agencies to propagate successful financial
education strategies; to promote more effective coordination with financial inclusion and
financial stability mandates; and to develop frameworks, tools and guidance that can be
adapted to local conditions. Frameworks for evaluating the effectiveness and measurement
of financial education initiatives should be developed to avoid pitfalls that can lead to poor
outcomes despite significant time and resources invested in many activities.
At the regional level, consumer protection measures are being developed in tandem with the
proposed economic measures to achieve greater economic integration under the ASEAN
Free Trade Area. For the region, enhancing financial literacy of consumers will be an
important consideration in raising the standards for consumer protection frameworks and in
promoting financial inclusion. I expect that this will be discussed at the ASEAN Roundtable
which will take place tomorrow and I encourage your active contribution to this important
dialogue. The roundtable discussion will provide opportunities for ASEAN policymakers to
share countries' experiences, exchange key insights on promising approaches and to
explore new ideas and identify opportunities to deepen collaboration at the regional level.
These are important matters as it enables policy makers to formulate new development
policies and better strategies.
It has been a very productive symposium. The dedication and commitment expressed by
those who have participated so actively in the various sessions should energise and inspire
us all to strive even harder and achieve more to improve the well-being of our communities.
On behalf of Bank Negara Malaysia, let me take this opportunity to express our thanks to the
OECD and INFE, and the moderators, speakers and discussants in making this event a
success. I would also like to thank all delegates for your active participation throughout this
symposium. I hope you have gained valuable insights for charting your own national
strategies for financial education.
Enjoy the rest of your stay in Malaysia, and we look to the opportunity to welcome you back
in the future.