Anita Angelovska Bezhoska: Opening address - Fifth Meeting of the
Regional Working Group for Financial Education of Southeastern
Europe
Opening address by Ms Anita Angelovska Bezhoska, Governor of the National Bank of the
Republic of North Macedonia, at the Fifth Meeting of the Regional Working Group for Financial
Education of Southeastern Europe, Skopje, 27 September 2019.
* * *
Distinguished representatives of the central banks,
Dear representatives of international institutions,
Dear guests, ladies and gentleman,
It is my great pleasure to give the opening address at the Fifth Meeting of the Regional Working
Group for Financial Education of Southeastern Europe, hosted by our national bank. I am more
than certain that joint fora, such as this one, are important venue for raising our awareness and
knowledge on matters of mutual interest. And, there is no dilemma that financial education, as a
spotlight of this working group, is an issue of mutual interest gaining prominence and importance
among all stakeholders - central banks, regulators, financial services providers, consumers. We
are all faced with rapidly evolving financial landscape, in which being knowledgeable means
being capable of reaping the benefits and mitigating risks.
Now allow me to shed some light on a couple of important dimensions such as relevance of the
financial literacy and the benefits it brings to the society, the specific circumstances that brought
this issue to the fore in the last decade, the role played by the central banks in this segment, the
current state and the challenges ahead for the region and our country.
Why does financial literacy matter? It is more than clear that the absence of understanding of
the basic financial concepts erodes our capability to make proper and well-informed choices in
terms of savings, investment, and borrowing. The costs of these choices are not confined only to
individuals, but they can have systemic implications, eroding the overall financial stability. The
translation of these misinformed decisions into systemic risks is exactly one of the main reasons
why financial literacy became the mainstream in the past decade. The pre-crisis credit boom
was supported by irrational exuberance and overconfidence of "never ending" rise in assets
prices and low financing costs. The credit boom turned into credit bust, and the consequences of
the "bubble - burst" are still with us. According to the latest IMF map of weak spots, heavily
indebted households are still the main source of vulnerability in many systemically important
advanced and emerging economies, and potential source of next financial crisis. Apparently,
being financially literate and informed, can help in preventing, or at least mitigating the
occurrence of such "weak spots". To bring the issue closer to the regional context, let me remind
us of the "episode" of excessive borrowing in Swiss francs that occurred in several countries in
the region (Hungary, Croatia, Serbia, Poland), amidst low interest rates and assumed stability of
the exchange rate. Hence, the last crisis clearly demonstrated that many agents are not fully
aware of the consequences of their financial decisions.
Financial literacy is becoming even more relevant given the last decade's proliferation
The tighter regulatory grip
of the innovative services offered by new FinTech companies.
on traditional sources of finance, on the one hand, and promotion of new alternative sources of
finance underpinned by technology, on the other hand, have been conducive to emergence of
array of new financial products and services. This promotes higher financial inclusion, but also
exposes consumers to new risks. The fact that FinTech solutions can be very complex make the
task of risk identification and mitigation by service providers and/or regulators difficult. According
to "Southeast Europe focus on Fintech and Innovation" the FinTech is the fastest growing IT
branch and the two largest FinTech segments in the region, each comprising a quarter of all
FinTech companies, are payments services and crowdfunding and peer-to-peer lending. Over
the last couple of years, this trend has even led to discussions for risk of financial exclusion in
case financial education does not keep pace with financial innovations. It asks for a greater
vigilance, awareness and knowledge by all of the stakeholders on the possibilities it offers, but on
the risks and threats as well.
Going beyond the importance for the well-being of the individuals and the overall
financial stability, financial literacy can play an important role in increasing the domestic
savings, which is one of the key factors in speeding up the real convergence in the
Although in the recent period domestic savings has been picking up, still in most of the
region.
economies in the region it remains below the adequate levels needed to support stronger
investments and increase the long-term potential of the economies. This is particularly relevant
given the changing business models of the banks that imply a lower reliance on external sources
of finance that may pose constraints for stronger credit support. Higher financial knowledge may
also contribute to higher savings in capital market instruments and thus provide more balanced
structure of corporate sector financing. Currently, the capital market depth in the region is
hovering around 50% of GDP, being far below the EU average of around 200% of GDP.
One of the Vienna Initiative reports highlights the importance of financial literacy for
capital markets not just from the savings point of view (demand side), but also from the
supply side. According to their estimates, financial literacy level is one of the three key factors
that explain the lower use of alternative sources of financing in the region in comparison with the
EU average. This once again proves that the need for financial education regionwide is indeed
widespread, which means necessity of a larger scope of our activities, including the corporate
sector, especially the small and medium-sized enterprises.
Furthermore, the financial literacy supports the ongoing process of raising financial
inclusion, which is deemed to be an important dimension for having stronger,
sustainable and more inclusive growth where the benefits are shared by the wider
community. The necessity for stronger financial knowledge and financial inclusion is
undisputable. It is important for curbing risks, and unleashing the potential of the economies to
grow.
But, what is the current state of play? Data shows that notable gaps exists and there is a
long way to go. International institutions reports indicate that Southeast European countries are
lagging behind developed economies in terms of financial literacy and inclusion, despite their
efforts to actively address these issues. According to the pursuant to
financial literacy surveys
the standard methodology of the International Network on Financial Education at the OECD
(INFE-OECD), on average 62% of the population of the OECD countries achieved the minimum
target score for financial knowledge, while in Southeast European region, this percentage was
lower and amounted to 40-55%. Despite the fact that the level of financial inclusion,
measured as a percentage of adult population holding a bank account, has been increasing, in
the SEE region it is still lower when compared to some of the more advanced countries in the
wider CESEE region. The data from the Global Findex database of the World Bank, points to a
percentage of 77% in 2017 for our country, lower than that compared to Croatia (86%), Slovenia
(98%), Latvia (93%), Estonia (98%). According to the Standard & Poor's Global Financial Literacy
Survey, the average difference in the rank is around 20 places between the countries of the
region and the EU-15 countries.
Given the lessons
What role as central banks do we have in elevating financial literacy?
learned from the crisis and the evolving financial innovations, in the last decade central banks
have played an increasing role in the coordinated activities of the national policymakers tilted
towards financial education and inclusion. Hence, central banks are active participants and
promoters of the financial education process in almost all countries. The benefits are apparent:
educated entities estimate risks and understand monetary policy stance better, the better the
understanding of the economy and finances, the smoother the functioning of financial markets;
the more efficient financial markets; the stronger monetary policy transmission and the credibility
of the central bank.
In this context, let me briefly touch upon several activities our institution has embarked
on in this area. Financial education and financial inclusion have formally become part of our
agenda. We have widened the scope of educational activities, by wider portfolio of educational
articles, more inclusive approach to financial education and closer cooperation with other
regulators. The National Bank supported the organization of the European Money Quiz for
teenagers with educational activities for the teaching staff, and has been proud of our high school
students who won the second place in Europe. Very importantly, there is an ongoing process of
preparation of the National Strategy for Financial Education and Inclusion, which we believe will
pave the way for more educated and more inclusive society.
Dear guests,
This workshop proves that apart from national initiatives to elevate and promote financial
knowledge, regional initiatives are on board as well. I think this approach provides synergy;
employs joint resources and enables more efficient achievement of the vision that we all share.
I am pleased that we will formalize our commitment and readiness for joint action with the first
Memorandum of Cooperation in the field of financial education and financial inclusion in
Southeastern Europe. We must all strive to be strongly committed, not only to declare, but also
to enable efficient implementation in practice. No doubts I have, that this will be the case.
At the end of my address, on behalf of all the stakeholders, I would like to express sincere
gratitude to INFE-OECD and EFSE for their support all these years. It is unquestionable that
many of the activities we have taken so far would have been difficult to carry out without their
support. I truly hope that we justify the trust given to us.
The mission that we have is important, as by supporting financial literacy, we support provision of
public good. In doing so, we must not forget that "Financial literacy is not an end in itself, but a
step-by-step process. It begins in childhood and continues throughout a person's life all the way
to retirement" - George Karl. Therefore, we must be consistent, inclusive, committed and patient
while playing our role in the financial education of our society.
I wish you a successful and fruitful meeting.
Thank you.