The Need For Solid Financial Literacy

The data remain negative, but there are signs of some counter-trends. More recent estimates actually indicate a growing interest especially among younger age groups, despite the fact that in 2020 Italy was ranked 25th out of 26 OECD countries in terms of citizens' economic and financial education. However, the general level of understanding remains rather low. This has negative repercussions both individually and collectively because greater economic and financial awareness is essential in allowing the country to innovate and prosper. We discuss this in our interview with Donato Masciandaro, Full Professor at the Bocconi Department of Economics and newly-appointed Director of the Committee for the Planning and Coordination of Financial Education Activities of the Ministry of Economy and Finance. The EduFin Committee – including representatives of four ministries and four supervisory institutions – has the task of planning and promoting initiatives on financial literacy to help educate Italians regarding savings, investments, pensions and insurance.

Is financial education really that important?
Yes, and for at least two reasons. Firstly, it helps one make better economic choices. Secondly, it increases one's awareness. These are two advantages that intertwine and reinforce each other. In fact, the more aware you are of what you do on an economic level, the more you feel like a contributing member of society, and this helps both the economy to grow and community to have more cognizant citizens.
Then there is a third, relatively recent aspect: that of a virtual and digital reality in which each of us, especially the youngest, participates.
Each of us is part of a network – whether small communities, physical networks or even virtual networks. Individuals are faced with a series of unprecedented choices; currencies will become increasingly electronic and we will soon have a digital euro. In addition, all banking and financial services are becoming more digital.
Finance, insurance and pensions generally pass through this intertwining of social networks and digital reality. So there are at least three reasons why financial literacy is not only necessary but, consequently, increasingly important.
So who is responsible for educating citizens on financial literacy?
Both private entities and public institutions – including supervisory and regulatory institutions, which are already active – can offer financial literacy. The core issue at this point is not the amount of financial knowledge we have available, but more so its quality.
Its evaluation is one of the areas that the Committee you are Director of will be responsible for.
I would say this is a crucial area. When the Committee was first established in 2017, the priority was to begin the conversation on financial education. In a sense, there was a problem of quantity. Today it is more a problem of quality: it is necessary to understand who creates these financial literacy initiatives, and the quality offered to the population. The Committee will always have to keep this in mind during its three-year mandate.
It is a tricky task. How do you intend to go about it?
The aim is to bring about an evolution that is both courageous and prudent. It must be an evolution, continuing the activity that the Committee has already started in recent years to define guidelines for the recognition of educational initiatives. However, we must have the courage to do so in a more systematic and incisive way. At the same time, we must be prudent because we must always take into account the budgetary constraints, which require us to carefully evaluate the way in which every single public euro is spent, especially during such a delicate time for our country.
Another sensitive topic is schooling. How do you plan to introduce financial education as a subject to be studied?
Our country does not yet have legislation regarding financial education. Lawmakers have always found themselves at a crossroads: on the one hand, financial education could be a subject in itself, and on the other, it could become part of civic education. A bill is being debated today which has opted for the second route, which I believe to be the wisest one.
What did not convince you about the first option?
In an ideal world, it would be the perfect solution. How do you find the resources and skills in such a short time, though? Rome was not built in a day. The second option defines a gradual path to raise awareness of economic and financial topics among students and teachers within civic education. It is a realistic choice; the alternative would have risked amounting to nothing.
It is said that they are more advanced abroad. Is this really the case?
In the United States, there have been initiatives aimed precisely at introducing financial literacy into the curriculum. What the Committee must do is look at both Italy and abroad, starting from the substance of what were once details. For example, it is necessary to have a portal not only in Italian, as is the case now, but in English as well. We must also be ready to dialogue with other countries and international organizations such as the OECD. Quality means this, too. One must be willing to try, with courage and prudence. At least we won't have any regrets.