ben s bernanke : financial education speech by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the conversation with the chairman : a teacher town hall meeting, federal reserve board, washington dc, 7 august 2012. * * * good afternoon and welcome. i am delighted to have the opportunity to speak today with educators throughout the country on the topic of financial education. thank you for your participation and for the important work you do. as an educator myself, i understand the profound effect that good teachers and a quality education have on the lives of our young people. today i hope you will learn from each other and share ways to best promote learning and, in particular, to help students achieve greater financial literacy. financial education supports not only individual well - being, but also the economic health of our nation. as the recent financial crisis illustrates, consumers who can make informed decisions about financial products and services not only serve their own best interests, but, collectively, they also help promote broader economic stability. smart financial planning – such as budgeting, saving for emergencies, and preparing for retirement – can help households enjoy better lives while weathering financial shocks. financial education can play a key role in getting to these outcomes. research by federal reserve board staff members on the effectiveness of financial education for young military personnel, for instance, found that those who had taken a high school financial education course were more likely to save regularly. 1 effective financial education is not just about teaching students about financial products or performing financial calculations. it also involves teaching them the essential skills and concepts they will need to make major financial choices. high school students might not recall specific information from a lesson about loans a year later when they go to get their first car loan or student loan. however, if they understand and remember some basic ideas – for instance, that it ’ s important to shop around for a loan to get the lowest interest rate, to review the fees charged, and to know how to contact financial counselors and advisers – they will be more likely to make a good decision. a particularly valuable lesson we can teach students is how to apply an economic way of thinking to their decisions. for instance, the topic of student loan debt and whether students are prepared to service that debt upon graduation has received increased attention lately. students with some exposure to economic thinking will be more likely to conceptualize their spending on postsecondary education as an investment in their own human capital and choose their school,

addition, the separation could simplify group structures. this would facilitate risk management and supervisory scrutiny as well as resolution, if need be. however, as the boundaries between various banking activities are fluid it is difficult to draw a clear line between them. consequently, structural interventions in banks ’ business models must be carefully designed. they might help to solve the too - big - to - fail problem, but they are by no means a magic bullet. how to resolve a sifi 3. 1 key attributes of effective resolution regimes for financial institutions without any doubt, we need effective resolution regimes for financial institutions. unfortunately, the crisis has revealed a significant lack of suitable resolution instruments, especially in a cross - border context. this is why the g20 leaders, back in 2011, endorsed the financial stability board ’ s “ key attributes of effective resolution regimes for financial institutions ” as a reference point for national resolution regimes. they set out core elements of national resolution regimes on a global level. for instance, in future every g20 country is to entrust restructuring and resolution functions to appointed authorities. recovery and resolution planning will become mandatory in every resolution regime. jurisdictions around the globe are currently contemplating their preferred resolution strategy for systemically important banks. two stylized models have recently been set out by the financial stability board : a single point of entry - and a multiple point of entry - strategy. the fsb / bcbs, macroeconomic assessment group : a ) “ assessing the macroeconomic impact of the transition to stronger capital and liquidity requirements ”, dec 2010 and b ) “ assessment of the macroeconomic impact of higher loss absorbency for global systemically important banks ”, oct 2011 bcbs, the regulatory framework : balancing risk sensitivity, simplicity and comparability – discussion paper, july 2013, http : / / www. bis. org / publ / bcbs258. htm bis central bankers ’ speeches question behind these strategies is whether resolution tools will be applied by a single authority at the top level of a failing bank or whether they will be applied in a coordinated manner by more than one authority at the level of regional or national units of the bank. another matter of priority is that resolution instruments, including the bail - in tool, have to be codified in national laws. the key attributes are quite a step forward. implementing them will gradually align national resolution regimes. i am hopeful that this will significantly curtail the ability of financial institutions to hold taxpayers to ransom. it is now up to governments to