You are here: Home Knowledge Base Economy Improving Financial Education and Literacy Proposals Seeking for a minimum but universal standard for financial literacy
Symposium 2012

Proposal - Seeking for a minimum but universal standard for financial literacy

The Challenge

As governments face increasing debt burdens and companies too face significant cost burdens, there is a clear movement towards individual responsibility for financial planning for retirement. This mov ...

As governments face increasing debt burdens and companies too face significant cost burdens, there is a clear movement towards individual responsibility for financial planning for retirement. This movement is happening at precisely the time that individuals themselves are feeling more insecure about the future in the face of declining job security and the increased reluctance of financial institutions to provide credit.

The most complicated task we must address in the current financial meltdown is a gap between its global character and national efforts to combat it. Although the financial turmoil affects all over the world, each national government individually tries to overcome without sufficient international coordination. This apparent gap leads to incorrect behavior of individual vis-à-vis the financial meltdown. He normally understands such a global character of this issue, while he doesn’t know how to act based on appropriate knowledge of global macro. Instead of that, he remains to be a national citizen and blames his government for not taking sufficient measures against the economic slowdown, even though the individual government can’t in principle do anything directly against the meltdown. In some countries, national citizen’s frustration causes even politicizing of the issue.

To change the situation fundamentally, all the citizens on the globe need to be taught to grasp how the global macro, or international money flow works. For this purpose, the global community should set a minimum but universal standard for such an education, so that every individual can understand what he should know to reach a decent life in the modern financial capitalism. Elements we should include in this standard are as follows:

  • Basic knowledge of information literacy
    Without treating information properly, any individual can never survive in the financial market. But the point is all of us seem to be almost lost in the midst of the accelerating flood of information in the era of internet. We should share meaningful results of development of OSINT (Open Source Intelligence) techniques and optimize them for learning by individual without professional background. Essential outcome military and intelligence agency have acquired can be converted to civil use (e.g. http://www.fas.org/irp/doddir/army/fmi2-22-9.pdf)
  • Basic knowledge of financial literacy in a narrow mean
    Without updated knowledge of financial tools, any individual can also never survive in the financial capitalism. We should bundle a variety of essential concepts such as “securitization” and “BIS gold swap” and define them to let the non-professionals to understand them. In this mean, the global community needs to compile a definitive edition of dictionary on the financial world, which should be translated in each national language.
  • Basic knowledge of world financial history
    Every citizen has been taught to memorize its national history during the school days. However, financial activities are more and more of transboundary character these days. Ordinary text book on national history never refer to what transboundry investors have done in the world modern history. So far, that could remain to be behind the door, because such a gap has brought the smart investors huge profits. But after the current financial meltdown broke out, the scene has been drastically changed. Everyone on the globe knows the existence of transboundary investors acting behind the scene. Thus, the global community should begin to edit a text book on how the real financial world has been historically working and acting independently of nation states.

There are two possible ways for us to compile such a standard with three elements. The one is to let an international organization be responsible for that. International experts will get together and discuss in its framework. The results will be transferred to its member state’s government, which will make use of them to enhance financial literacy in its own country. The OECD can be regarded as such an international organization with sufficient knowledge and experiences.
Another way of implementing this solution is to let a non-governmental, global forum such as the GES do that. Its Experts will discuss online (“Virtual GES”) beforehand and the results should be endorsed in the annual meeting. International financial institutions will be asked to financially support this project, while they understand we can’t go further from now on with previous “shifting cultivation” in the market. Not only institutional investors but also every individual as potential client needs to know how to behave correctly in the market. To spread the results of this project, relevant NGOs, NPOs and other associations in each country should be connected as a network to the GES. Instead of relying on national government, this project to enhance financial literacy will be implemented on grass root level effectively.

Without the financial market, our modern civilization can’t go forward. However, the validity of the motto “Too Complicated to Teach” has been fading away. We can reach the post financial meltdown only by tackling the issue of lack of basic financial literacy. For this purpose, we can simply start with setting a minimum but universal standard of financial literacy together.

    Related Proposals

    Proposal
    Symposium 2012

    A Thousand Reasons to (Re)Build Financial Education

    In order to tackle the question of why ordinary people should be educated about finances, we could list a thousand reasons, but the first one is quite enough: Financial education is a cornerstone of a ...

    In order to tackle the question of why ordinary people should be educated about finances, we could list a thousand reasons, but the first one is quite enough: Financial education is a cornerstone of a balanced and productive life and therefore helps people to have a better life. Financial education enables people to know how to accumulate and invest resources wisely in order to consume with pleasure, be prepared for emergencies and guarantee their future. This means having discipline, making plans and knowing how to invest. We live in a world that is going through incredible transformations, and in which

    Polity, Academia, Business, Civil Society
    Proposal
    Symposium 2012

    Reinventing Financial Literacy after the Global Financial Crisis

    The following solution proposals are an excerpt from the background paper “Financial Literacy: Viewpoint”. Need to refocus financial literacy programs after global financial crisis Future financia ...

    The following solution proposals are an excerpt from the background paper “Financial Literacy: Viewpoint”. Need to refocus financial literacy programs after global financial crisis Future financial literacy programs need to prepare participants for three broad realities of life after global financial crisis – government bonds can no longer be considered the safest investment option, healthcare costs will rise at a higher rate in the next decade and it will be accompanied by generally higher inflation (due to rise in fuel and food prices). Keeping these in mind, financial literacy programs need to focus on helping people do better risk management

    Polity, Academia, Business, Civil Society
    Proposal
    Symposium 2012

    HOPE Business-In-A-Box

    Introducing HOPE Business-In-A-Box. What if we could reconnect the power of aspiration with the power of education in our children's lives? What if a child in elementary school could start a business ...

    Introducing HOPE Business-In-A-Box. What if we could reconnect the power of aspiration with the power of education in our children's lives? What if a child in elementary school could start a business for $50-100? A middle school student could do the same with up to $200, or up to $500 for a high school student? What if they could get a financial literacy course and a course in dignity, connected with a primer course in entrepreneurship? They could select from 25 businesses that can be started for $500 or less, pitch their idea for this business in front of a

    Polity, Academia, Business, Civil Society
    Proposal
    Symposium 2012

    Credit and Money Management- 700 Credit Score Communities

    In today’s world, a person’s credit score largely determines their ability to access gainful employment, safe housing, affordable insurance premiums, banking opportunities, and other makings of fi ...

    In today’s world, a person’s credit score largely determines their ability to access gainful employment, safe housing, affordable insurance premiums, banking opportunities, and other makings of financial dignity. In line with our mission to build communities where every citizen has an opportunity to obtain their dreams, HOPE has developed the 700 CREDIT SCORE COMMUNITIES (700 CSC) program as an additional service to our Credit and Money Management program. The 700 CSC will allow participants to join a community of other like-minded individuals to participate in one-on-one and group credit counseling sessions to ultimately improve their credit score and realize their

    Civil Society
    Proposal
    Symposium 2012

    Beyond Financial and Economic Literacy – The Case for Social Entrepreneurship Education

    One of the key reasons for declining trust in our economic and financial order is widespread ignorance of how society and the market economy work. Particularly young people know too little about the i ...

    One of the key reasons for declining trust in our economic and financial order is widespread ignorance of how society and the market economy work. Particularly young people know too little about the interactions between the economy and society, freedom and responsibility, companies and entrepreneurship, and about how these resources might be used to benefit the common good, rather than individual interests. As a result, they feel that they are at the mercy of the systems around them. It is certainly nothing new to point out that more should be done in our schools to promote financial and economic literacy.

    Polity, Academia, Business, Civil Society
    Proposal
    Symposium 2012

    To minimize devastating financial mistakes, focus financial education at the point of sale.

    Much of the economic downturn that has affected the world’s industrialized nations has been blamed on poor financial decision-making by consumers who took on too much of the wrong sort of debt, fed ...

    Much of the economic downturn that has affected the world’s industrialized nations has been blamed on poor financial decision-making by consumers who took on too much of the wrong sort of debt, fed the growing real estate bubble and made numerous and costly financial “mistakes,” presumably as the result of low levels of financial literacy. Two primary solutions have been proposed to prevent these “mistakes” from reoccurring: financial regulation and financial education. While financial regulation, in the extreme form of a single, approved “plain vanilla” product for each financial need (e.g.: a fixed-rate 30 year home mortgage) or the somewhat

    Polity, Academia, Business, Civil Society