alan greenspan : financial education speech by mr alan greenspan, chairman of the board of governors of the us federal reserve system, at the jumpstart coalition ’ s annual meeting, washington, dc, 3 april 2003. * * * i am pleased to be here today to share with you my perspective on the importance of financial education. i commend the leadership of the jumpstart coalition and the activities it has undertaken to support teachers working on the front - line of financial education. trends in consumer finances as you are aware, today ’ s financial world is highly complex when compared with that of a generation ago. an understanding of how to maintain a checking and savings account at a local financial institution may have been sufficient twenty - five years ago. today ’ s consumers, however, must be able to differentiate between a wide range of products, services, and providers of financial products to successfully manage their personal finances. certainly, young adults have access to credit at a much earlier age than their parents did. accordingly, they need a more comprehensive understanding of credit than was afforded to the previous generation - - including the impact of compounding interest on debt balances and the implications of mismanaging credit accounts. in addition, as technological advances have contributed significantly to the dramatic changes within the financial services market, consumers more generally must be familiar with the role that computers play in the conduct of every traditional financial transaction, from withdrawing funds to gaining access to credit. while the focus of your efforts is to provide youth with a solid foundation for understanding personal financial management, the benefits of that objective extend to a much broader audience. data, both empirical and anecdotal, point to trends in consumer financial conditions that have caused concern among some consumer groups. for example, federal reserve statistics indicate that household debt outstanding increased more than 9 percent last year - - the largest rate of increase since 1989. and while analyses suggest that, overall, this level of debt is being serviced adequately, reports of nonbusiness bankruptcy filings reaching record highs in 2002 reveal that many consumers are experiencing significant financial crises. regulators, lenders, community leaders, and consumer advocates continue to be concerned about abusive home mortgage lending practices. more recently, the emergence of certain deposit - linked products has also sparked debate among these parties. for example, one product marketed as protection against bounced checks has generated concerns among consumer groups ranging from the appropriateness of assessed fees to the possible unintended effect of reinforcing poor accountmanagement practices on

options to improve the payments landscape. we continue to conduct research to fully understand technological innovations and their associated benefits, risks, and tradeoffs. we must also fully understand any related implications for federal reserve payment infrastructure and policy outcomes. researchers cover a wide range of policy areas, including payments policy, privacy considerations, financial inclusion, financial stability, and monetary policy implications. because new digital assets are currently focused on tokenization of certain traditional or even new types of money, tokenization is a research theme for the federal reserve and for central banks globally. while this topic is relevant to cbdc research work, it will also inform other issue areas — including discussions about stablecoin regulation, novel banking activities supervision, and efforts to improve the current payment system. technologists at the board and the reserve banks have been conducting focused research and experimentation to provide insight into technical capabilities and risks associated with digital assets, including cbdc, and the programmable platforms that could support payment infrastructure improvements. these experiments give the researchers hands - on experience with new technologies and allow the federal reserve to examine the application of emerging technologies in retail, wholesale, and cross - border use cases. - 13 the federal reserve board continues to collaborate closely with international counterparts on issues related to digital payments. this includes engagement with multilateral institutions, such as the bank for international settlements, g7, financial stability board, and bilateral engagements with other central banks. this work reflects the interconnectedness of the global financial system and allows us to follow actions taken by other jurisdictions and understand any related implications for the united states. conclusion as the money and payments landscape evolves, i continue to stress the importance of looking ahead and analyzing potential changes that may emerge well into the future. this can be done most effectively by understanding the broad range of options that could be leveraged to improve payments, including technology, improvements to existing payment infrastructure, and policy options and their implications. given the breadth of activity in this space, i believe that policymakers must specify the problems they are trying to solve, understand the range of alternatives that could address any problems, including policy and technology options, and thoroughly analyze the associated risks and tradeoffs. for all of the federal reserve ’ s involvement in this work, i support a responsible approach to innovation that recognizes the role of private sector innovations, benefits from the strengths of the u. s. banking system, and focuses policymakers on thinking about payment and financial system infrastructure and effective policy. to achieve this, i support a clear regulatory