Luigi Federico Signorini: Financial literacy and empowerment


Understanding finance has never been easy, but with the growing range and complexity of the financial products that are currently available, a minimum of financial literacy has become essential to take informed decisions, exploit opportunities and manage risks as best each of us can.

The benefits of financial education, however, may not be confined to personal well-being. There is a case that basic economic and financial skills could also result in a better informed public opinion and, hopefully, in better aggregate economic and financial outcomes as a consequence. A growing body of literature1makes this case, citing e.g. a clearer discussion of macro policies (such as budgetary and monetary policies) or structural reforms (such as pension reforms); greater trust in public institutions; increased democratic participation in civic and social life; a more stable and efficient financial system.

At the very least, awareness of the functions of key financial-policy institutions, such as central banks, seems important to build trust in the system and in the institutions themselves. In the case of central banks, the picture of their main functions appears sometimes to be blurred in the public’s eyes; and where knowledge is limited or biased, trust in institutions may in turn be undermined. A 2021 survey by the ECB2 showed that people asked to pick what they perceive to be the tasks and objectives of the ECB from a list, often select topics that are unconnected to the ECB’s mandate. Poor understanding

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