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It is with great pleasure that I am participating and sponsoring the Central Bank of Cyprus International Conference on Financial Literacy. I would like to thank and congratulate the Governor of the Central Bank of Cyprus, Mr. Herodotus, for taking the initiative to organize today's event and for his ongoing efforts to promote the very topical issue of Financial Literacy.
On the occasion of today's conference and the presence of such distinguished personalities from the financial sector from all over the world, allow me to begin my intervention with the main priorities of our economic policy for the immediate future. Cyprus has a modern open economy, with significant potential to enhance our outward-lookingness and strengthen its position as a regional business hub. Our economic policy and all our interventions are based on the triple bottom line of fiscal discipline, a stable financial sector and continuous reforms. In other words, we operate on the basis of the general principle of fiscal responsibility, which has already ensured Cyprus' upgrade to investment grade by all rating agencies and macroeconomic performance significantly above the European average.
Within this framework and with a people-centred approach, we have proceeded to implement a series of interventions and specific initiatives in the first year of our governance, and I have already announced the implementation of specific actions for the next 12 months. In the years since 2013 and what we have suffered because of wrong policies, we need to acknowledge the mistakes we made. Important steps have been taken, as shown by the progress recorded in the respective MoneyVal reports, the close cooperation with experienced international authorities, as well as other initiatives. For our administration, the reputation and credibility of our country is paramount, and a prime example of our political will is the descent to Cyprus, already here, of an FBI team to enhance the ability of the Cypriot authorities to identify, investigate and prosecute cases related to financial crimes in Cyprus that have been pending for years. In the same context, we are proceeding, despite any opposition, which is fully respected, with the establishment of the National Sanctions Enforcement Unit and the Single Supervisory Authority for Administrative Service Providers in the near future.
Of particular importance in the context of our economic policy is also the successful completion of the adoption of the pending divestment framework from 2017, with all the negative side effects on our economy, while we will proceed next week in the Council of Ministers with the appointment of a Financial Ombudsman, who, with expanded powers, will strengthen out-of-court dispute resolution.
Our country's tax reform (the last one was in 2002) is high on our priorities. I also had a very constructive meeting yesterday with the relevant team during which, among other things, I asked for the preparatory work to be speeded up so that we can announce the tax reform. The aim is to create a fair, efficient and sustainable tax system that will support growth and social cohesion, paying particular attention to the middle class, which has been the backbone of the Cypriot economy and society over time. Around the end of 2024, we will present, in a first phase, our proposals on green taxation for the adoption of a system that will be fiscally neutral, i.e. will not lead to an increase in the overall tax burden, while we may also present by the end of 2024 some aspects related to the broader tax transformation of the country that are not related to green taxation.
Furthermore, in order to improve access to finance for small and medium-sized start-ups and self-employed people, it is expected The Agency, through financial and guarantee instruments, will finance general needs of SMEs, as well as investments for the necessary digital and energy transition.
Attracting productive investments that create new quality jobs is a top priority for our government. We have recently proceeded, after a dialogue also with our country's business community, to further target the successful Investment and Talent Attraction Strategy, adopted by the previous government, and we have further strengthened it with actions such as implementing legislation that facilitates strategic investments, introducing the Blue Card to attract qualified scientific personnel and further improving the offer of housing and training services to such personnel.[/ I THINK IT IS CLEAR THAT THE ECONOMIC POLICIES OF THE STATE, OF THE EXECUTIVE POWER ARE IN LINE WITH FINANCIAL LITERACY. AFTER ALL, THE DATA AND FIGURES ILLUSTRATE THE GLOBAL CHALLENGE OF FINANCIAL LITERACY IN THE MOST STRIKING WAY. VARIOUS SURVEYS REVEAL THAT A SIGNIFICANT PERCENTAGE OF THE POPULATION DOES NOT KNOW THE BASIC DIFFERENCES BETWEEN DEBIT AND CREDIT CARDS AND BASIC CONCEPTS SUCH AS INFLATION, INTEREST RATES AND COMPOUNDING. AT THE SAME TIME, THE FEDERAL TRADE COMMISSION IN THE US HAS PUBLISHED DATA SHOWING THAT CONSUMERS LOST $3.8 BILLION IN 2022 AS A RESULT OF INVESTMENT FRAUD. CYPRUS IS NO EXCEPTION AND ACCORDING TO ALL RELEVANT SURVEYS AND RANKINGS OF RECENT YEARS, CYPRUS HAS RECORDED VERY LOW PERFORMANCE IN KEY COMPONENTS OF FINANCIAL LITERACY, PARTICULARLY THOSE OF BEHAVIOUR AND MINDSET.
This fact has multiple negative implications. The consequences of the problem of financial illiteracy are negative for households, businesses and, by extension, the economy as a whole. This is why our Governance Programme included actions to accelerate the State's initiatives towards mitigating the problem and why, from my first meeting with the Governor of the Central Bank, I expressed my readiness to cooperate and actively participate in efforts to address this challenge.
Precisely in this context, I consider it very important that the National Strategy for the Promotion of Financial Literacy and Financial Education has been developed on the initiative of the competent Ministries, Supervisory Authorities and public universities, and a Committee, chaired by the Central Bank, has been established for its implementation and monitoring. The work of the Commission is important and challenging, as the challenges are multifaceted. The complex nature of the problem is confirmed by the fact that young people and women are still underperforming in financial education, which is why the response to the problem must be rapid, multi-dimensional and targeted, with close cooperation between the relevant stakeholders.
Public education naturally has a central role to play in these efforts. The need to create a relevant culture. I am pleased to announce today that in order to promote financial literacy, the Ministry of Education, Sports and Youth has planned that during the next school year, an interventional financial education programme will be implemented in all sections of the third grade throughout the country. This is an important first step. At the same time, I am also announcing today the launch, within the framework of the Life Education course in Primary Education, of the cultivation of financial literacy skills. I believe that if we want to tackle the problem, we need to build a culture within our schools.
To design the content of the course we have drawn on research data and best practices from other EU countries and beyond, which, I must note, are not numerous, which, if you like, makes our country one of the pioneers on this issue.
We want and aim from the very beginning, from primary school, to create solid foundations and that is why we are proceeding with the institutional integration of this subject in the school timetable in order to achieve the goal we have set: Our students, our young people, to acquire all the knowledge, skills and experience they need to be able to deal effectively with financial issues in their daily lives.
In addition to the positive impact on households, the beneficial impact of financial literacy on the country's business community is undeniable. A financially literate population creates healthier and more competitive businesses, while creating conditions for the further development of a healthy and competitive financial ecosystem that will offer better, more efficient and cheaper financing services.
It is no coincidence that in our Governance Programme we have included the objective of improving Cyprus' performance in financial literacy, in order to surpass the European average in the important priority area of financial literacy. What we want to achieve in order to enhance the competitiveness of our country goes through financial literacy.
Improving the level of financial literacy among the population and the workforce of our country will undoubtedly have a positive chain effect on economic growth, individual well-being and financial stability of our country.
In the spirit of today's conference, I close with the well-known quote by Benjamin Franklin, who very aptly said that investing in knowledge yields the best interest rate. A maxim which in this particular case is perfectly valid, both figuratively and literally.
(PM/AF/NZ)
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