PRESS RELEASE
Speech by Ardian Fullani, Governor of the Bank of Albania, at the meeting with teachers and pupils from high schools ''Fuat Babani'' Bilisht and ''Raqi Qirinxhi'' Korça

Education is expensive but priceless

As it can be understood from the saying, today's meting is on education. Is there any better place than in a high school classroom to discuss such a topic? Naturally education is a broad topic, but as the Governor of the Bank of Albania, I will discuss education and formation of an economic-financial culture with you today.

I. Why should economic-financial education start early?

Many of you could rightly think that this kind of information is gained through experience, schooling and as the time goes by. But, believe me, even after studying for 13 years in elementary and high school, 4 years in university and 2 years in post-university courses, 2/3 of aged Americans can not answer the question whether the quantity of goods purchased with one-year savings is the same, bigger or smaller when deposit interest rate has been 1 percent and annual inflation rate has been 2 percent.

Studies have shown that even in pioneering countries of sophisticated financial products and services, the economic-financial culture of the population leaves much to be desired, indicating that economic-financial education should start early. This becomes especially necessary for countries such as ours, where for decades on end the state was the one taking care of the security of citizens' income.

A good economic-financial education would make citizens of our country tomorrow not hang back from such questions as: How to use a credit card? What can I benefit from a compound interest? How can I better invest my savings? Why do I need a pension fund? Let alone more complicated macroeconomic issues, such as supply and demand, overall production, monetary policy impact on everyone's life and many other issues of the same nature.

Can you imagine, how much more efficiently the Bank of Albania's Supervisory Council's decisions on interest rate change would be understood, if the public were well-informed on the way a market economy operates?

Consumer behaviour has also to do with correction of damaging inclinations of human beings, mostly deriving from lack of proper education in finance. Given the above, we at the Bank of Albania like the philosophy of creating an economic-financial culture at a young age. Think for a moment, how much useful it would be in the everyday life, if a high-school pupil, having knowledge on Viktor Hugo's masterpieces, trigonometry and biology, knew how to manage his own money!

II. Central Bank and the economic-financial education

First, I would like to say that the central bank's commitment to economic and financial education of the public is related to the achievement of its primary objectives. We are aware that a well-informed public that understands our role in the economy is much more able to understand and accept the reasons behind difficult decisions the central bankers take time and again. Furthermore, monetary policy has to do with such issues as expectations on inflation, which is directly related to consumers, businesses and their confidence in central bank's decisions. Therefore, a well-informed public that understands the economic-financial issues is very important to implementing our policies.

Secondly, there is also another reason, let's say more commanding, which makes the central bank be earnestly committed to creating an economic-financial culture. To everyone living in a market economy, the meaning of underlying economic concepts and the taking of sound financial decisions is of primary importance. This culture influences the decisions of the citizens, which if appropriate, they help forming a sound economic growth.

III. What does having an economic-financial culture mean?

This question has not only one correct answer. Consumers would say that we should teach them to be 'smart consumers', i.e., teaching them to spend their money wisely, so as not to fall into the market 'trap'. The proponents of economic-financial culture prefer focusing on the future of individuals, i.e., taking sound financial decisions today that will lead to smart use of their money and economic well-being tomorrow. There are some approaches concerning the economic-financial education. One is the direct approach, which teaches the underlying economic concepts. Another one considers the economic education as knowledge on specific topics, such as the benefit from free trade or from labour market globalization.

Which is the best approach? We at the Bank of Albania have not wasted our time by trying to answer a question that has more than one correct answer. Taking into consideration the great British economist, Alfred Marshall, who regarded the economy as 'a study of mankind in the ordinary business of life', we have tried to approximate the central bank to the everyday life of the public. Like Marshall, we believe that the best way to succeed is to help people understand the economy and everyday life relationship, which has to do with the ability to make proper economic decisions, establish a good standard of living, understand the market risks and assess the policy decisions that affect citizens' life.

The Bank of Albania's commitment to this area is earnest and ongoing. Initially, we needed three years to set up programs and establish cooperation, to arrive at where we are today. Our purpose was to reduce at maximum the mystery around the central bank, hoping to raise public confidence in its excellent operational and decision-making quality. As part of this endeavour, we have launched an education program titled 'Central Bank in everyday life', whose activities you already know:

1. We distributed 80.000 educational brochures only in 2008;
2. We carried out training workshops for about 100 teachers of economics in Tirana and Vlora;
3. We held meetings with about 2000 high school pupils in Tirana and Vlora;
4. We carried out the competition on 'Real value of money' in Tirana and Vlora.

Many other projects are on the way. I am confident, this work will yield apparent results in raising confidence in us, policymakers.

The Bank of Albania is also committed to a more general economic education of the public. There are other factors that make this education more indispensable in everyone's life, such as:

• Variety and sophistication of financial products and services. Numerous financial institutions carrying out their worldwide activity today are in a feverish race to create and launch numerous financial products and services. Lack of proper information and knowledge on them makes consumer orientation towards their usage almost impossible. For instance, pension funds, which provide new possibilities for well-being and financial cover.
• Rapid developments of technology. They have made lending more widespread. But lack of knowledge about it makes almost impossible the obtaining of proper and timely information and its use for facilitating the financial decisions of everyone's life.
• Demographic movements of people from rural to urban areas have made many families be confronted with a financial system they almost didn't know at all in the past.
• Personal history of everyone's relations with finances. In some cases, bad past experiences make people loose confidence in financial institutions, and moreover, avoid them in everyday's life. This group of interest is not only more prone to take wrong financial decisions on buying a house, a car, investing in children schooling or commencing a business. Also, it risks to fall prey to obscurities that are present in any market economy.

Concluding, it is clear that the modern world is complicated. It confronts us with complex economic and financial choices, which make us have more knowledge on these issues. Education on the underlying economic-financial concepts will not only make us more capable of facing the labour market or taking sound financial decisions, but will also help us become more aware voters, taxpayers, and consumers. Therefore, the Bank of Albania is greatly committed to creating a real economic-financial culture. Financial knowledge is a key, not to enter the world of rich people as some of you may think about, but to live with dignity in everyday life.

Soon we will start implementing a new project that aims at raising public confidence in the Albanian banking system. I invite you, together with your mates from other schools of the country to join this new initiative of the Bank of Albania. In its focus will be young people, who after a massive training by the Bank of Albania, will address the community with relevant explanations on the indispensability for reducing cash in the economy, increasing the use of e-payments, understanding principles and rules of banking system transparency, explaining the need for savings, and many other concepts that have to do with money, banks and their products. This is a challenge that needs the commitment of those that are above, the creativity of field specialists, the cooperation of institutions and teachers and above all devotion, in order to make the coping with this challenge as entertaining as possible. It is difficult, but casting my eye to all the people gathered in this classroom, gives me strong reasons to be optimistic!