Are we Spaniards illiterate from a financial point of view?

This article that we read yesterday in El País has made us reflect on the low level of knowledge about economics and finance that our country has and on the worrying lack of training for our young people on these issues.

As the article says very well, our students learn what chalcopyrite is, a copper mineral, but they don't know what the Euribor is or what the difference is between a deposit and a checking account. Only a minority will take advantage of their knowledge of chalcopyrite in their lifetime, and yet all will have to make savings-related decisions. Julio Segura, president of the CNMV , often uses this anomaly to draw attention to a serious problem: the very low financial culture of the Spanish.

Supervisors, teachers, members of the financial industry and consumer associations ask the Government to take this deficit seriously and, among other measures, to introduce Financial Education as a subject in Compulsory Secondary Education (ESO). They also see an urgent need to promote basic knowledge among an adult population whose investment decisions are becoming increasingly important in an economy in crisis that points to the dismantling of the welfare state as it had been understood until now. The low financial culture in a country where more than 90% of financial products are sold through banking networks is, for some, an explosive combination.

The preference shares fiasco is the penultimate example that, on many occasions, citizens do not even know what financial product they are buying. Having a basic understanding of finance would help separate the wheat from the chaff. "The current crisis has revealed some situations that could possibly have been mitigated if the levels of financial knowledge of individuals had been higher," say Anna Ispierto and Isabel Oliver in one of the latest quarterly bulletins of the CNMV. "A particular case is the increase in the sale of certain products to retail investors, who had difficulties in understanding the information provided and evaluating the risks they were taking," added the supervisor's techniques.

While financial culture does not improve globalization and innovation, along with technological advances have increased the showcase of investment products and services. In many cases, the new offering carries a much higher degree of complexity. Consumers have at their fingertips new instruments (insurance products, hedge funds, structured products, reverse mortgages) with a variety of commissions, expenses, returns, maturities ... which pose notable difficulties in understanding.

“Education contributes to the stability of the financial system. Having a culture in this field means that investment decisions are better informed and certain situations such as over-indebtedness are avoided ”, says José María Lamamie, director of the Department of Financial Institutions of the Bank of Spain (BdE).

The level of financial knowledge in Spain is below the average for OECD countries and is significantly lower than in the Anglo-Saxon world. “Spain has only 30 years of economic development. It is a short time. There are still important layers of the population that have not come into contact with the investment world. A symptom of this anomalous relationship with savings is that until recently queues formed at banks at the beginning of the month because people did not trust them, they wanted to see their pension money and update their card ”, says Manuel Pardos, President of the Association of Users of Banks, Savings Banks and Insurance (Adicae). “Beyond investment professionals, it is clear that there are very significant gaps in basic knowledge of finance. And I am not referring only to people without studies, ”says Javier Méndez, general director of the Foundation for Financial Studies.