Brussels aims to turn Europe’s savers into investors
Brussels (dpa) – Citizens of Europe are saving trillions – and hardly earning interest on bank accounts. To encourage more citizens to invest their money instead, the EU Commission aims to strengthen consumers’ financial education.
Why should financial education be improved?
A survey by the EU Commission in 2023 found that only one in two people in the EU has average financial knowledge, and less than one in five has a high level of knowledge. The survey also revealed significant gaps, particularly among women, young people, those with lower incomes, and individuals with lower educational levels.
With improved financial literacy, people could manage their finances better, avoid fraud, responsibly manage debt, and save more, according to the Commission. With the strategy it has now presented, the authority also aims to ensure that citizens participate in capital markets on a solid basis.
How does the Commission plan to improve citizens’ financial education?
According to the Commission, there should be initiatives from public and private actors to improve financial literacy in all member states. A Europe-wide information campaign is intended to enhance national measures. The Brussels authority also encourages member countries to utilize existing EU funding channels for initiatives and research projects on the topic. To monitor progress and developments, the Commission plans to conduct regular surveys, among other things.
What should the savings and investment accounts consist of?
Accounts from banks or neo-brokers should be easy to use and flexible, offering a wide range of investment options and tax incentives. Very risky or complex products, such as certain derivatives or some cryptocurrencies, should not be allowed.
In addition to a lack of financial literacy, the Commission states that complicated processes when investing and a fragmented financial market with little competition are reasons why a lot of money is sitting in savings accounts. To provide citizens with simpler options for investing their money in the future, so-called savings and investment accounts should be established in more member states.
Why does the EU Commission want more savings to end up in capital markets?
The savings rate in the EU is reportedly one of the highest in the world: around ten trillion euros in savings from citizens are held in banks in the EU. At the same time, there is an urgent need for money in the community of states for purposes such as rearmament or the green and digital transition. If more citizens invest their money, for example, in publicly traded companies, more capital will be available.
In an optimistic scenario, the Commission estimates that a stronger participation of private investors in capital markets could increase investments in European assets by more than 1.2 trillion euros over ten years. “This would give EU companies better access to capital and more financing options to support their growth and innovation,” says the Commission. According to them, this could also include innovative small and medium-sized enterprises. Overall, the savings and investment accounts play an important role in strengthening the EU’s competitiveness, according to the Commission. (September 30)
