> Posted by María José Roa, Center for Latin American Monetary Studies, CEMLA

Screen Shot 2015-12-17 at 1.05.37 PMCentral banks and bank superintendencies play a fundamental role in developing financial education and inclusion programs, either as members or leaders of organizing committees. In order to better understand the role of the region’s central banks in financial education and inclusion programs, the Center for Latin American Monetary Studies (CEMLA) and Banco de la República, Colombia, surveyed 23 central banks and 17 superintendencies in a study that provides a general overview of their financial education and inclusion programs.

Central banks are the main promoters of Financial Education (FE) programs in most countries of the region. These institutions make alliances or coordinate with other public and private players for developing such programs. The content and objectives of the FE programs in central banks have evolved, particularly after the recent financial crisis. Since the beginning, all the central banks have offered content regarding their history and main functions. They use this to strengthen the institution’s image, the effectiveness of monetary policy and build agents’ credibility in inflation expectations. However, after the crisis, some central banks began to consider broader content that would help the population make better financial decisions on a day-to-day basis. Besides better personal financial decision-making, some central banks also mentioned that financial education should also pursue broader objectives such as financial stability and economic growth.

The central banks offer a wide variety of programs and services, including general talks, web pages, educational material, contests and theater. The main target groups are primary and secondary school students, followed by the general public. The latter is linked to the fact that an increasing number of central banks are promoting the inclusion of FE in the school curriculum. In general, assessment of the programs continues to be an unfinished task for the region’s central banks, particularly when talking about experimental assessment.

As for financial inclusion (FI), the study reveals that the central banks generally participate less in FI than in education programs. Around half of the central banks that have financial inclusion programs cited the following as such: financial education, developing standards and regulations for new financial inclusion products and institutions, and creating simplified products. In particular, the banks pointed out regulations for mobile and electronic payments, and correspondent agents. A small group of central banks mentioned promoting the rights of financial consumers.

The FE programs developed by the superintendency or regulatory bodies are relatively new, dating from the last four or five years. The content of the programs the superintendencies are in charge of mainly concerns the rights and duties of financial consumers and topics related to saving, budgeting and credit. The superintendencies’ aims for such content include preventing illegal activities and, like the central banks, achieving better financial decision-making among the population.

The main niche for superintendence’s FE programs is the general public, followed by primary school students. As with the central banks, their programs are numerous and varied, and similar to those of the central banks, i.e., general talks, educational material, activities in the mass media, participation in fairs and festivals, etcetera.

As for financial inclusion programs, most superintendencies mentioned they were implementing FI programs. Whilst the central banks participate more in FE programs than those of inclusion, the superintendencies appear to be involved equally in both types of programs. This result is consistent with the fact that most FI programs are linked to tasks normally carried out by regulators: Overseeing new instruments and financial inclusion channels, and financial consumer protection matters.

In line with the above, the superintendencies reported that their main FI strategies are regulating correspondent agents, basic accounts, mobile banking and electronic money. A large number of superintendencies mentioned that they were performing baseline studies to generate statistical data on access and usage. In the same way as the central banks, their programs are generally aimed at the general public. Some of them mentioned having programs for low income groups. The superintendencies also coordinate or form committees with public and private institutions, including central banks, for their education and inclusion programs. Their answers also lead to the conclusion that FE is a fundamental pillar of financial inclusion.

This study concludes that financial education and inclusion programs are becoming increasingly important in the agendas of central banks and superintendencies, as well as those of the different players involved. In the short and medium term, the central banks and superintendencies mentioned continuing to strengthen and develop financial education and inclusion programs.

The study suggests that one key factor for designing the programs and their assessment methodologies in the future is having clear objectives regarding the aims of financial education and inclusion programs or strategies. As has been shown, for both central banks and superintendencies one of the main objectives is better financial decision-making among the population. Nonetheless, some objectives relate to the bodies that lead the strategies or programs, as with central banks’ pursuit of the effectiveness of monetary policy and price stability and superintendencies’ pursuit of the prevention of illegal activities and fraud, or financial consumer protection. The diversity of objectives and institutions implies that the programs’ characteristics and assessment methods will also differ. These diverse objectives linked to the normal activities of each institution help define the role of each of the players involved.

Only a few institutions went further and mentioned the ultimate macro-level objectives they pursue with such education and inclusion programs: economic growth, well-being, confidence in financial institutions and financial stability, among others. These programs ultimately form part of each country’s broader economic development or growth strategies that must be taken into account by the different institutions.
Finally, the study also shows there is a high degree of institutional cooperation among the different players in charge of the programs, generally through the creation of committees. Designing strategies based on success cases from other countries could be extremely useful in the region, even more so when taking into account the high level of interest shown by countries that are just starting to take the first steps.

This blog post is based on the study: Financial Education and Inclusion in Latin America and the Caribbean. Programs of Central Banks and Financial Superintendencies, available at http://www.cemla.org/PDF/otros/2014-10-Financial-Education-Inclusion-LAC.pdf

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