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

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.