The Central Bank of Cyprus held an event on financial literacy yesterday, bringing together the governors of the central banks of Cyprus and Greece to discuss the challenges facing Europe in channelling citizens’ savings into productive investment.
The round table was moderated by University of Cyprus Professor Andreas Milidonis and held against the backdrop of efforts to advance the European Savings and Investments Union, which aims to direct the savings of European citizens towards investments that support growth, innovation and international competitiveness.
Central Bank of Cyprus Governor Christodoulos Patsalides said the issue is multidimensional, involving a combination of factors including limited financial knowledge, low trust in investments, risk perception and behavioural patterns. Available data show that in Cyprus, as across Europe more broadly, citizens continue to prefer the security and liquidity of deposits, while investment is often seen as complex or as an option relevant only to a limited group, he said.
On the role of the financial system, Patsalides said banks are being called upon to act as a bridge between savers and investment opportunities. The Savings and Investments Union does not aim to replace banks, he said, but to complement existing sources of funding and create more options for citizens, while strengthening the resilience of the financial system through diversification. He stressed that fragmentation of the European market remains an obstacle and that participation requires an environment of equal rules, adequate protection and transparency.
Bank of Greece Governor Yannis Stournaras said the simultaneous development of strong banks and developed capital markets is associated with higher levels of investment, productivity and economic growth. Europe continues to lag in investment, particularly in innovative and productive activities, compared to economies such as the United States, where the two elements function in a complementary and mutually reinforcing way, he said.
Stournaras said the strategic goal of the Savings and Investments Union is to deepen capital markets in a way that complements rather than competes with the banking sector. Initiatives under consideration include automatic enrolment in occupational pension schemes and the creation of a Savings and Investment Account with common features across all member states, aimed at gradually broadening citizen participation in capital markets. He said financial literacy is a core priority for the Bank of Greece, pursued through a strategy focused on education, public awareness and research, with the goal of empowering citizens to make sound financial decisions and strengthening confidence in the financial system.