Financial literacy

The financial system is composed of a group of institutions whose aim is to channel savings in order to satisfy demand for credit. In other words, its job is to act as an intermediary between those who have excess funds and those who need them. A sound financial system is fundamental for the economic stability of countries. But what determines the soundness of the financial system? The proper operation of its markets, the robustness of its institutions and, in particular, the fact that all the agents are well informed.

Knowing, understanding and making mature judgments on financial products is good for people and crucial for the development of a more sustainable system. Today, there is a very complex range of products on offer: you can choose between insurance, reverse mortgages, hedge funds, forward contracts, commodities, call options, over-the-counter products, swaps, basket options, etc. It has become extremely difficult to understand the financial markets. This is why it is so important for people to be well trained in these subjects. Of course, they have to understand the opportunities offered by the different transactions, but also their risks. That’s the only way they can make good decisions and become consistent savers or responsible debtors.

In 2005, the OECD approved a resolution recommending member countries to promote financial education among its citizens. Financial education should be a continuous, long-term process that covers the different stages in life. Obviously, people’s needs vary according to their age and situation.

Older people prepare for their retirement and manage their pension plans; adults buy cars or homes, or apply for loans for holidays; young people receive their first paychecks, rent a flat, and prepare for an independent life; while minors try to get the most out of their monthly pocket money.

For all of them, financial literacy is fundamental, and thatís why in BBVA it is one of our priority and differentiating commitments.

BBVAís Global Financial Literacy Plan 2009-20112009 operates in two main areas. First, through the program Adelante con tu futuro (Forward with your future), the plan aims to assist the processes of banking penetration in developing regions, particularly in Latin America. Educating in financial questions is an essential step in banking penetration and it is the only way possible for consolidating sustainable development in these countries.

The Plan also aims to contribute towards boosting education in values associated with the use of money among the young; in this area, students of 6 to 14 throughout Spain are learning concepts such as saving, effort, responsibility and solidarity at school.

This is our program Valores de Futuro (Future values). In all, throughout 2009, more than 100,000 people in Mexico and 320,000 children in Spain benefited.

A trained, thoughtful and critical group of citizens will be in a better position to relate to the financial system, and will make us better – not only ourselves, but all the actors operating in the system. That is why we believe that investment in education means a commitment to the health of the financial system as a whole.

If it is important for people, it is important for BBVA.