Opening speech Queen Máxima at the online conference ‘Consumers in financial services: How to enhance their financial education’ from the Joint European Supervisory Authorities (ESA)

Speech | 01-02-2022

Ladies and gentlemen,

Financial health has always been an important topic, but today it has become even more urgent.

Europe, like much of the world, is facing growing inflation. In December, prices in the Eurozone rose by 5%. Across Europe, an overwhelming majority of people express concern about the impact of inflation on their financial wellbeing.

Already before that, 40% of people said that they had less than one-fifth of their monthly incomes left after paying household bills, leaving no room for a rise in costs.

The unpredictability of the pandemic also creates more uncertainty for millions of people and their families. Many have struggled to stay afloat since the start of this crisis. Four-in-ten state that they are poorer today than before the pandemic.

In these environments, good financial health is critical. The key issue is: how can we enable people to successfully manage day-to-day finances, build resilience, and work towards long-term goals. People with good financial health are more resilient and better equipped to seize opportunities. A financially healthy population can relieve pressure on government safety nets overall. So, if we want to rebound quickly in times of crisis, financial health is an essential tool.

This is a responsibility that concerns us all. It should be a common goal for governments, regulators,  private sector, financial sector actors and NGOs.

I have listened to many personal stories, men and women who almost collapsed because of problematic debts. 

In the Netherlands, we have a program called Debt Lab that fight taboos and help reduce over-indebtedness. We have learned, that given that it takes people an average of 5 years before they seek help, we must be on the lookout for early warnings. The first red flag in the Netherlands is often when a person stops paying health insurance premiums, but this might be different in other countries.

The sooner people get help, the better. But of course, prevention is the best medicine. I am encouraged by the commitment and effort of the European Supervisory Authorities to advance financial education and literacy.

The ongoing pandemic has driven new interest in financial wellbeing across Europe. And we should seize this opportunity to keep momentum going. 

I do not pretend to have all the answers. But I do have some suggestions on how to go about this.

My first suggestion is: financial health should be the main goal for financial education initiatives And this progress must be measured.

Financial education needs to contribute to better financial lives. It is how we influence financial behavior that actually counts. And to be sure there is impact, we need a good view of people’s financial health. So, measuring financial health is a first key step. Perhaps you are already collecting data that provide you with useful insights.

But for those unsure where to start, there is good news. My partners, including the OECD and World Bank, have done tremendous work to pioneer this effort by releasing guidance for policymakers. I invite you to review our recommendations and join us.

My second suggestion is: design more effective interventions for financial education.

Financial education at schools is just not enough, we must meet people where they are.

Over 20% of people worldwide learn about money management from YouTube. 18% of Generation Z get financial advice from TikTok ‘influencers’.

This reliance on social media will grow for the foreseeable future. So it is important we learn how to use these channels properly.

We also must ensure that there is sufficient focus on the underserved, including the poor, the young, and the women. Many of them face stumbling blocks that we need to consider, such as pay and employment gaps for women.

My third suggestion is: assess present products and services, along with their effects on financial health.

Today, online and offline, consumers face a barrage of advertising to buy things with financing offers, such as “Buy Now Pay Later” deals. We should ask ourselves, do these offers really help people manage their expenses? Or, do these tactics lead to over-spending?

High-risk cryptocurrency and day trading have also become increasingly popular among people hoping to become rich. Young inexperienced investors are extremely vulnerable.

So, how do we ensure that consumers understand the terms and risks? How do we encourage financial institutions to change practices that maybe generate income, but unfairly hurt low-income consumers? 

In the end of the day, these practices will not only hurt consumers but can also harm businesses in the long run.

Businesses are in a unique position to influence people’s financial behaviors for the better. There is great potential in offering products that improve financial health. Savings products that nudge people to achieve goals are just a great example of this.

Ladies and gentlemen,

I will conclude by noting that while we have a long road ahead of us, the time is now to put financial health at the top of our agendas.

This will enable us to help Europeans build better financial lives and create more resilient economies. 

I urge you to identify good practices, share ideas, and join forces. Let us support each other in this great effort.

Thank you so much.