EU seeks to boost financial literacy to unlock billions in savings

In September 2023, the EU Commission announced its strategy to enhance financial literacy among European citizens in order to encourage them to invest their savings rather than keeping them in low-interest bank accounts. This strategy emerged from a recognition that a substantial amount of money is currently tied up in savings accounts, while the need for funding in areas such as defense and the green transition is critical. The initiative is particularly aimed at addressing the gaps in financial knowledge revealed by a survey conducted by the Commission, which found that women, young people, and those with lower income and educational levels have lower financial knowledge, creating barriers to investment participation. To facilitate increased engagement in capital markets, the EU plans to introduce savings and investment accounts modeled after Sweden’s approach. This would help unlock the trillions of euros in savings currently held in EU banks, which yield minimal returns for savers. The Commission believes that making investments more comprehensible and accessible would enable citizens to use their savings to support various growth sectors, thereby benefiting the broader European economy. By raising the public's financial literacy and simplifying investment processes, the EU aims to shift the existing savings culture towards a more investment-oriented mindset. The Commission estimates that this could result in an increase of more than 1.2 trillion euros in investments in European assets over a ten-year period. More effective participation of private investors in capital markets would grant companies access to better financial options, promoting their growth and capacity for innovation. This strategic shift is crucial not only for individual financial empowerment but also for enhancing the overall economic stability of the EU. As part of this broader initiative, action will be taken to partner with public and private entities to launch projects that target financial education across all member states. Surveys will be conducted regularly to monitor progress and effectiveness in improving financial aptitude among citizens. The Commission encourages member countries to utilize existing EU funding channels to support educational initiatives and research related to financial literacy, setting the stage for a more informed and active investor base in Europe.