have an appropriate level of insurance and reach retirement age with comfortable pension plans. they won ’ t pay more interest than they need to when borrowing, or settle for less than they should when saving. people with basic financial awareness would understand risk return trade - off and take better investment decisions, thereby being less vulnerable to frauds and dubious schemes. financial education can help reduce levels of debt, poverty, repossessions, stress, illness and even crime. in sum, financial education improves the quality of people ’ s lives and financial affairs and provides them peace of mind, by instilling in them a sense of confidence and security about matters of money. for the macro economy …. 6. from a macro perspective also, financial literacy / education has important implications. financial literacy, together with financial inclusion and consumer protection form a triad which, collectively, has an important bearing on financial stability. the three legs of the triad have strong inter - linkages, with each element having a vital bearing on the others. the absence of any one would make it difficult to attain the remaining goals. financial literacy aids financial inclusion initiatives as it creates awareness about the benefits of connecting with the formal financial system and hence, creates demand for financial products. financial literacy supports consumer protection as it helps consumers better understand the features and risks inherent in financial products, thereby reducing the risk of mis - selling. it also generates awareness and willingness to approach the grievance redressal system available, in case of disputes. 7. at a macroeconomic level, the cost of financial illiteracy is significant and is manifested through scourges such as unemployment, poverty, high personal indebtedness and financial exploitation through mis - selling. it results in avoidable leakages and wastages, which any resource - scarce country can ill - afford. the savings habit, which can be inculcated through financial education, can help channelize household savings into productive activities, thereby supporting economic growth. the increased demand for financial services, created as an outcome of financial education efforts, can help bring depth and diversification to the financial markets. how are we doing in india? 8. in india, financial education has been identified as a policy priority and a massive effort involving the government, various financial sector regulators, financial institutions and civil society is underway. the financial stability and development council ( fsdc ), which is bis central bankers ’ speeches chaired by the union finance minister, is mandated, inter alia to focus on spread

stefan ingves : the housing market, the banks and household debt speech by mr stefan ingves, governor of the sveriges riksbank, to the riksdag committee on finance, stockholm, 1 march 2011. * * * the origins and the course of the financial crisis can be described in slightly different ways and in more or less detail. i will not provide any detailed account here – i have already done so on more than one occasion, not least here before the riksdag committee on finance. an essential component of the crisis was the build - up of credit and house price bubbles over a number years in a number of countries. when these bubbles burst, the financial system was rocked to its foundations, and governments and central banks around the world were forced to take exceptional measures to stabilise the situation. the decades prior to the crisis were marked by extensive deregulation of the financial markets. there was a strong belief that the financial sector was to a large extent selfregulating, and that it was able to resolve most problems on its own through market incentives. this belief was seriously undermined during the crisis. there is now considerable international agreement that the market ’ s ability to “ manage itself ” was overestimated, and that regulations need to be stricter and supervision tightened. of course, what one wants to achieve is to reduce the risk of future financial crises. although more and stricter regulations may be linked to a certain cost, for instance, in the form of higher interest rate margins, studies indicate that this is more than counterbalanced in the long run by more favourable economic development. 1 i would like to point out that i am not talking about a return to the strictly regulated credit and finance markets we had before – deregulation has of course had some positive effects and meant that the economy in many ways functions better. but i think that most people will agree that the financial sector needs a tighter rein than it has had for the past fifteen, twenty years. tighter regulations and supervision planned reform work is already under way on an international level. the basel iii rules, which in brief entail the banks having to hold more and better capital and larger liquidity buffers, are one example of this. in the supervisory field, the eu has established a special body, the european systemic risk board, which is to identify risks in the financial system as a whole and to provide warnings and recommendations to the countries and authorities concerned. sweden of course supports