2023-07-10 23:30:04
In Brazil, which has the highest interest rates in the world, huge income inequality and record indebtedness of families, who often get into debt and cannot manage their finances properly, the implementation of public policies that promote financial citizenship is essential to ensure the well-being and financial security of citizens, in addition to contributing to the economic stability and sustainable development of the country.
To help with this task, the Central Bank (BC) created the concept of financial citizenship to generate understanding about the aspects that impact people’s financial lives, helping with money management. More than a goal of the State or financial organizations around the world, financial citizenship has a very simple objective: to make everyone have a good relationship with their money. And this is fundamental for the formation of a more conscious and responsible society in relation to money.
There are two fundamental elements when we talk about financial citizenship. The first is to understand that the concept encompasses people’s daily lives, from understanding transactions, means of payment and financial products. Therefore, if the relationship between people and money is relevant in a society, “CITIZENSHIP” needs to take into account the rights and duties of citizens when it comes to managing personal and family finances.
Those who have a good relationship with their money are able to make dreams come true, design life projects and, supported by credit options, overcome difficulties or have a better life. On the other hand, those who have difficulties with their finances can have very serious problems in their personal relationships, be prevented from carrying out their work, have to sell goods and, at the limit, can even get sick.
The second element of financial citizenship has to do with the maxim: “the limit of my rights is at the beginning of the rights of the other”, be it an individual, a company, the State or any actor in society. Thus, full financial citizenship exists when there is a balance between rights and duties in the relationships we have with money.
Financial citizenship has four major dimensions: financial inclusion, financial education, consumer protection and participation in the Financial System dialogue.
1 – Financial inclusion has everything to do with access to financial services suited to the consumer’s profile. In the modern and connected world we live in, it is practically impossible for there to be full realization outside the national financial system. People who only have access to cash do not have a series of facilities to better manage their finances. Furthermore, they are more vulnerable. Technology is poised to be the biggest driver of inclusion, but for that the financial system needs to be simple, cheap and secure.
2 – Financial education exists when people are able to make good choices and have autonomy in their decisions. For this, it is necessary to have knowledge about products and financial risks and thus face challenges and take advantage of consumption opportunities without being manipulated.
3 – Protection is the dimension of financial citizenship that seeks to create a trustworthy environment, where people are not subject to misleading practices. An important aspect enters here, which is conflict resolution. The aim is to establish a financial system that promotes healthy relationships for people.
4 – Finally, there must be “participation”. People need to engage and dialogue about the rules, practices and future of the financial system. On a daily basis, financial institutions produce an enormous amount of information when dealing with customers, but little is taken advantage of this richness. It is necessary to use “big data” technology to treat this data and transform it into knowledge, and then develop and implement effective actions in favor of the system itself.
Financial citizenship will only be real if all dimensions are put into practice. Each one within their competence needs to assume responsibilities and develop actions that are within their reach. From awareness of the importance of financial planning and money care, it is possible to build a more equitable and prosperous society. We need to stop this growing increase in financial ignorance, with the certainty that more critical and prepared people may have more chances of building a better future, thus making a more prosperous and happy nation.
By Diogo Angioleti, specialist in finance and behavior at the Ailos System
Source: Ailos
#rights #duties #people #relation #money