ewart s williams : financial literacy address by mr ewart s williams, governor of the central bank of trinidad and tobago, at the breakfast meeting of the institute of chartered accountants of trinidad and tobago, port - of - spain, 7 november 2006. * * * good morning ladies and gentlemen and thanks for inviting me to share this celebration of accountant ’ s week with you. i am happy that the institute of chartered accountants of trinidad and tobago ( icatt ) has seen the need to celebrate accountant ’ s week, if only to remind the community of how essential and noble your profession is. there is no doubt that the accounting profession worldwide has gone through tough times in recent years, with enron, worldcom and other scandals. these problems have made accounting a far more regulated profession than it once was, as the standard - setters seek to ensure more transparency and restore confidence in the profession. however, business practices will always evolve at a much faster rate than the adaptive capacity of the profession and thus it is impractical to have rules that anticipate every business transaction. in the final analysis, you, as accountants, would need to depend on your integrity and on the fundamental principles and standards which emphasize that financial statements should clearly and faithfully represent the economic substance of business transactions. we in trinidad and tobago are fortunate to have an accounting profession with a reputation for the highest standards of competence and ethics. i did not plan to talk about the demands and challenges of your profession. instead ms. lee loy ( angela ) gave me permission to introduce a topic which i hope is of personal interest to you, since from my vantage point, it should have considerable national interest. even if you hadn ’ t thought about it, i would like to enlist your personal support, and that of a credible and respected organization like icatt, in getting national recognition for the importance of a financial literacy programme. let me first give some background as to why i am convinced that we need such a programme. while we focus disproportionately on the economic challenges we face, we tend to forget the remarkable strides we have made during the last decade, both in terms of economic growth and structural transformation. for the record, over the last decade, our per capita income has moved from around us $ 4, 500 to us $ 14, 000 currently. even adjusting for inflation, real per capita income has more than doubled. admittedly, the main driver of our income growth has been the energy sector.

not fully understand the nature of the agreements they signed. clearly, they simply wanted the money and paid no attention to the rate of interest or other terms of the loan, until they found out that they couldn ’ t repay. of course, on many occasions, the officials of the bank or insurance company may not have had the required knowledge or may have forgotten to clearly explain all the associated costs and attendant risks. we still have people who respond innocently to advertisements for schemes that promise to pay interest rates of 25 and 36 per cent per month. not long ago one of these schemes was able to attract close to $ 50 million in a period of less than a year. not unexpectedly, many people lost their life savings. currently, in trinidad and tobago, financial education is sporadically provided by private financial institutions marketing products and services to consumers. this happens in some work environments, and by a few counseling and repair organizations helping people to sort out their personal debt situations. but this clearly is insufficient. against this background, as announced in this year ’ s budget, the central bank is about to launch a comprehensive national financial literacy programme to provide unbiased and relevant financial education to the broad population. why the central bank? we think that the central bank is in an ideal position to spearhead this initiative because the confusion between information and advertising does not arise ; because we have the credibility to provide unbiased and impartial information ; and because, with our overview of the monetary system, we are in the best position to see the gaps and problems in the market. in addition, our interest derives from the fact that financial literacy can also facilitate the efficient operation of the market economy, in general, and of monetary policy, in particular. for example, knowledgeable consumers promote competition among financial and non - financial firms which benefits the economy as a whole. experience also shows that astute consumers are less vulnerable to fraud and abuse than the financially uneducated. financial literacy can also help the citizenry to get a better appreciation of interest rate and other market signals which can contribute to increasing the efficiency of monetary policy. the programme ’ s starting point is that financial education is not only for investors but for everyone. early financial education could begin to teach children the value of money and an appreciation for managing money. financial education is also for the average family trying to balance its budget, to save for the children ’ s education and for the parents ’ retirement. it is particularly critical for young people who need to