The Prague Post
October 6th, 2008
Endowment Fund     Business Listings ONLINE      Reservations      Classifieds    Subscriptions
Prague accommodation
Prague Real Estate

Home » Archives » Banking & Finance

A is for abacus

Government to boost financial awareness in secondary schools

By František Bouc
Staff Writer, The Prague Post
August 8th, 2007 issue

enlarge
Why are interest rates so significant? When is it appropriate to take a loan and when not? And what actually is a loan, or an overdraft?
Answers to questions that may sound trivial to financial professionals will soon be taught in elementary and secondary schools all over the country, as the Finance Ministry has been developing a project that will increase the financial literacy of youth.
“We’d like to make sure that every citizen has at least a basic understanding of financial markets,” said Deputy Finance Minister Milan Šimáček.
Low financial literacy is becoming a danger to society, the government fears. Without improved understanding of financial products, people can be easily manipulated by commercial banks and various loan or leasing providers.
Since 2006, the volume of loans provided to families in the country rose one-third to 540 billion Kč ($26.4 billion). This quickly rising tide of household debt and the number of large loans being taken out by low-income families has prompted the government to develop an education plan that will inform citizens, starting from a young age, about the opportunities and threats posed by financial products.
“Children should be taught how to keep personal and family budgets,” said Michaela Taschnerová, spokeswoman for the Education Ministry. “Then they won’t take out loans in the future that they won’t be able to pay back.”
The Education Ministry and the Finance Ministry are now cooperating on the project, which is called the National Strategy for Increasing Financial Literacy. It is scheduled to be passed by Prime Minister Mirek Topolánek’s Cabinet in September.
Should the ministers approve the plan, financial lessons would be introduced to local schools within a year.
Šimáček added it would be up to teachers at each school to decide whether they teach about finance in separate lessons or within other subjects.
Banks join in
In addition to the government, several commercial banks and other financial institutions are sponsoring education campaigns to boost national financial awareness.
GE Money Bank has been lecturing school teachers about financial markets. In return, the teachers are expected to make the world of finance more comprehensible to pupils.
Similarly, the Prague Stock Exchange (BCPP) has attempted to increase its public appeal by launching a Web site earlier this year that allows small investors to learn about exchange products and to practice stock trading. The simulator should build awareness, especially for the financial derivatives the BCPP introduced last October. The site
(www.px.cz) also provides a glossary of products and guidelines on how to trade on the Czech market.
“Our main ambition is to introduce the new products in a comprehensive way,” BCPP spokesman Jiří Kovařík said. The educational campaign was initiated on the recommendations of stock brokers, Kovařík said.
“After the launch of futures on the Prague market, stock brokers were telling us, ‘It’s great that you expanded investors’ opportunities, but you better tell them what futures actually are,’ ” Kovařík said.
Apart from increasing people’s awareness of financial markets, the government also wants to further protect the customers of financial institutions.
The Finance Ministry plans to introduce a new law enabling customers to return particular financial products to banks or insurance companies without being charged penalty fees. The daily Hospodářské noviny (HN) reported recently that customers could receive a right to return products such as credit cards, insurance policies and mortgage loans within two weeks without paying any termination fees.
In contrast to the educational projects, representatives of financial institutions were not keen on this proposal.
“A financial product is not a TV set,” said Tomáš Síkora, executive director of the Czech Insurers’ Association, to HN.

František Bouc can be reached at fbouc@praguepost.com


Other articles in Banking & Finance (8/08/2007):

Browse the Current Issue

If you enjoyed this article, why don't you subscribe to the print version!
We accept secure online transactions provided by PayPal and Moneybookers

Be the first to add a comment!


Full Name: *
City: *
E-mail: **
This comment can be published in the print version of The Prague Post
Enter the text on the right:
 visual captcha
Comment: *
* Required field. In order to be approved for display, comments must have a first and last name and a city.
** E-mails are required and will only be used for internal purposes.

Most visited in Business Listings

Hotel booking
The Prague Post Online contains a selection of articles that have been printed in
The Prague Post, a weekly newspaper published in the Czech Republic.
To subscribe to the print paper, click here.
Unauthorized reproduction is strictly prohibited.