Financial literacy is the combination of financial knowledge, skills and attitudes that help individuals to plan for the future and to protect them from over-indebtedness and excessive risk-taking.
The OECD/INFE 2020 International Survey of Adult Financial Literacy[1], showed that about 50% of the EU adult population does not have knowledge of basic financial concepts. The survey had shed light on the need of effective and incisive financial literacy strategies for adults.
To this aim, the EU Commission and the OECD-INFE (International Network for Financial Education) developed a joint EU/OECDINFE Financial Competence Framework for adults, that has been published in January 2022.
The Framework is intended to support the implementation of national financial literacy strategies and to improve the design of financial education programs and learning materials. Moreover, it will facilitate the assessment of financial literacy levels and the evaluation of financial literacy initiatives.
The newborn EU/OECD-INFE Financial Competence Framework is divided into four areas:
- money and transactions, whose goal is to establish the competences necessary to understand the characteristics of money, how to exchange it for goods and services and the importance of keeping track of the transactions;
- planning and managing finances, that aims at identifying competences for managing the financial situation in the short and long term, covering competences related to both saving and investments, and credit and debt management;
- risks and reward, that covers competences related to assessing and mitigating risks, and understanding the trade-offs of assuming risk;
- financial landscape, the content area related to consumer protection and obligations, a set of skills that helps consumers to preserve their financial wellbeing.
EU/OECDINFE Financial Competence Framework builds on the existing OECD/INFE Financial Literacy Core Competences Frameworks[2] and it integrates and updates previous guidelines taking into account the recent developments in digital financial knowledge. The Framework considers competences such as digital payment methods, crypto-assets, online scams and fraud, and cyber risks. Moreover, given the strong surge in sustainable financial products and the increasing complexity of the financial landscape, the Framework considers those attitudes and skills that are necessary to make sound financial decisions that account for their sustainability, such as environmental impact of purchases, sustainability characteristics of investment products, greenwashing, climate-related risks and sustainability labels.
The uptake of the financial competence framework will be facilitated through targeted exchanges in 2022 while EU and OECD will work on the financial competence framework for children and youth, that is expected to be finished by 2023.
[1] https://www.oecd.org/financial/education/launchoftheoecdinfeglobalfinancialliteracysurveyreport.htm
[2] https://www.oecd.org/daf/fin/financial-education/Core-Competencies-Framework-Adults.pdf
