Edition 1504
08 December 2018
Edition: 1504

Read this week's issue online exactly as it appears in print.

Twitter

Financial literacy key to ‘efficient market’ - central bank governor

by TPN/Lusa, in Business · 27-09-2018 11:18:00 · 0 Comments

Financial literacy is fundamental for an “efficient market”, according to the governor of the Bank of Portugal, Carlos Costa, who stressed the importance of bank customers being well informed.

Financial literacy key to ‘efficient market’ - central bank governor

“Without informed customers there is no efficient market,” Costa said at a conference in Lisbon on banking supervision, organised to mark 10 years since the global financial crisis. “Without supervision, even these customers may fall prey to illusions.”
According to Costa, “more informed customers are … more attentive and demanding”. In recent years, he said, it has become clear “that financial literacy and financial aptitude are a necessary condition for financial stability”.
As a result, he said, the promotion of financial literacy in an age of digital information is one of the supervisor’s current priorities.
During his opening speech to the conference, the governor also warned of the risks faced by young people who tend to use digital platforms.
“Regulation and supervision cannot prevent innovation, but innovation must not jeopardise financial stability,” he said. “The customer must feel protected, irrespective of the marketing channels.”
Robust or sustainable financial decisions by each individual customer are crucial for financial stability, Costa argued, but are not a sufficient condition, since economic agents do not take fully into account the externalities of their decisions, in particular systemic risk.
“This finding is particularly relevant when situations of euphoria in the market develop, notably in the residential and mortgage market,” he warned, adding: “The intensity and spread of distorted expectations of asset appreciation [vary in line with] the literacy and financial experience of a given population.”
This means that an improvement in financial education contributes to financial stability, “but [this] does not preclude negative externalities that undermine the stability of the financial system.”

Comments

Be the first to comment on this article

Interactive Topics, send us your comments/opinion on this article.


Edition 1504
08 December 2018
Edition: 1504

Read this week's issue online exactly as it appears in print.

Twitter

Pub

  • Toldolanda
  • Malo Clinic
  • Linen Etc
  • Cris Piessens
  • Intermarche
  • Audiocare
  • Nobel International School
  • Wellness Dreams
  • R.C. Brown
  • Land and Houses
  • Intasure
  • Abacoz
  • Veronica Pisco Lawyer
  • Bedrooms Extra
  • Blacktower

Portugal in the world press

Powered by Google