Prasarn Trairatvorakul: Financial inclusion and financial literacy in Asia
Opening remarks by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the
OECD/Thailand Seminar on "Financial Inclusion and Financial Literacy in Asia", Bangkok,
16 December 2014.
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Mr. André Laboul, Chair of the OECD International Network on Financial Education,
Distinguished Guests,
Honorable Speakers, Ladies and Gentlemen, Good morning,
I would like to start by welcoming you all to Bangkok. It is a great honor for the Bank of
Thailand to co-host the OECD Seminar on Financial Inclusion and Financial Literacy in Asia
with our partner, the Securities and Exchange Commission of Thailand. And, it is my great
pleasure to deliver the keynote speech at this very important event.
Many of you might question why the Central Bank Governor is here at this forum on financial
inclusion and financial literacy, as the Governor should be more worried about the slowdown
of growth in major economic sectors or macro-economic policies aimed at stimulating
Thailand's GDP at this very challenging period in our country. The reason I am here today is
that financial inclusion and financial literacy are the pre-requisites for solid development of
the national economy and a sound financial system.
Ladies and Gentlemen, the ultimate goal of the Bank of Thailand, as well as of other central
banks, is to ensure sustainable economic growth which will enhance the well-being of our
people. While assuring the progress of the financial system and well-established
infrastructure in Thailand, we also recognize the importance of consumer empowerment in
our financial sector. As a consequence, we established the Financial Consumer Protection
Center or FCC in 2012 to promote consumer protection. One of the FCC's key tasks is to
improve financial literacy of consumers.
Over the past few years, the FCC has continually been delivering financial education within
its capacity through creative tools and communication channels. The FCC has been sending
messages that would help shape consumers' behavior towards responsible finance
practices, which would consequently lead to financial discipline of the entire nation.
Nevertheless, the attempt to improve people's behavior to save and spend wisely has not yet
been fully accomplished. Household debt is still high at 70 to 80 percent of GDP for the past
two years. Crucial financial information and knowledge provided at Point-of-sale were often
ignored by customers. Moreover, people still seek loans from alternative sources such as
from the informal sector where interest rates are incredibly high and debt collection practices
are sometimes abusive and unethical. We also have to admit that the demand side evidence
is partially influenced by supply side factors. Intense market competition and countless
innovative products and services nowadays could also encourage careless spending
behavior. Therefore, effective measure to prevent such situation is truly in need.
The potential root causes or threats that influence people to make an adverse decision on
their saving and spending manner might consist of these three following factors. The first
one is poverty, which has long been one of the most important issues policy makers in
developing countries strive to overcome. When there is insufficient wealth to nourish basic
needs, indebtedness could become inevitable and it is difficult to get out of the vicious cycle
of debt.
The second factor is the growing trend in consumerism which largely overshadows
consumers' self-restraint and eventually entices them to spend recklessly. In this
wellconnected era, consumerism has rapidly intensified and spread widely through various
perceptive channels especially the mass media. Let me give you one example of this
consumerism we have experienced. Not long ago, the Bank of Thailand invited the bank's
CEOs to a meeting and we showed them their own television advertisement. The campaigns
were trying to induce people to apply for loans with streamlined process. This could lead
people to believe that applying for a loan was as simple as daily shopping at a supermarket.
An average ordinary individual could easily get the cash and spend on vacations, buying
some fashionable outfits, or paying for a wedding ceremony. Worse, one advertisement
related the number of loan application to the chance of success in a lucky draw, the more
you borrow, the higher chance of success to win gold necklaces. After watching those
commercials, the CEOs were surprised to learn how far their marketing campaigns had gone
and agreed to promptly revise the concepts of their marketing messages to minimize further
imprudent behavior.
Lastly, I must add ignorance as another essential cause of improper financial behavior.
Even with a well-designed financial education program with meaningful messages and
effective delivery channels, financial literacy cannot be achieved if consumers neglect the
necessity and benefits of appropriate personal financial management.
All in all, desirable financial behavior is sometimes well known, but less likely to be
implemented by consumers themselves. It is similar to living a healthy lifestyle. We know that
healthy food and exercise are good for us, but we don't do it. Hence, a solution to the
improvement in financial behavior remains a challenging puzzle for many of the policy
makers and practitioners to find the right solutions for various groups of people.
Ladies and Gentlemen, I truly believe that this seminar would allow an invaluable opportunity
for us to learn how to solve these puzzles from honorable speakers who have come a long
way to share with us their enriching experiences and lessons-learnt. The achievement of
effective financial education and behavioral change would eventually drive the global
community towards a more financial- literate and disciplined population who would help
ensure sustainable growth and equality in our society.
Lastly, I wish the seminar a great success. I also wish to express my sincere appreciation for
all of your endless efforts in promoting financial inclusion and financial literacy.
Thank you.