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.