Iohannis: Consumption-based policies and budget deficits have taken us away from strategic country goals, such as joining the euro

President Klaus Iohannis declared on Thursday, on the occasion of the participation in the first edition of the Financial Education Forum, organized by the Financial Supervisory Authority, the Bucharest Academy of Economic Studies and the Romanian Association of Banks, that Romania has undertaken “large-scale reforms and investments , which will generate added value, well-being and sustainable development over time ”. The president also spoke about cryptocurrencies, financial education or digitization. At the same time, Iohannis says consumption-based policies, pre-pandemic budget deficits and rising public debt “have taken us away from strategic country goals, such as joining the eurozone.”

Speech by President Klaus Iohannis:

Under the auspices of the “Financial Education Forum”, the program launched today is an invitation to both reflection and joint action to increase the level of training in a particularly important field.

I wanted to give High Patronage to this program because economic and financial education in society and in the business environment requires a serious, integrated approach and, finally, with concrete results.

Financial decisions are the most present decisions in people’s daily lives, about how and how to spend and how to save and invest. And the same logic applies to the country’s finances.

Education, financial or not, is about developing skills, but also about capitalizing on the lessons we have faced.
A decade and a half after joining the European Union, our country is still far behind in terms of inclusion or financial intermediation.

Since European accession, we have benefited from remarkable economic growth, from a gross domestic product of around € 100 billion in 2006 to almost € 270 billion this year, despite the two severe crises that have intervened during this period.

The financial-banking sector, with a key role in mobilizing resources for financing, has also developed significantly. In these 15 years, non-government credit has increased almost 4 times, and the value of the stock market is now 3 times higher.

But Romania continues to have the lowest rate of financial intermediation in the European Union.

Almost 20 million bank cards are currently issued, and the e-commerce sector has exceeded 6 billion euros. But we are still well below the European average of online shopping.

Education, financial or not, is also about future lessons, about how we relate to medium and long term developments. Digitization leads rapidly to innovative technologies that provide effective answers with a high degree of integration of financial services into the daily lives of users.

The world of cryptocurrencies, as a global network, is diversifying extremely rapidly, by accelerating technological progress, in step with the preferences of investors.

Educating and informing users, along with the right regulations, are the best solutions for the sustainable functioning of these markets.

All over the world, central banks are taking an interest in digital currency, looking for concrete, not just technical, options to ensure the confidence that the means of payment must enjoy.

In this context, it is commendable that Romania is positioning itself today among the leading European states by introducing financial education as a compulsory subject in schools. But, as in other areas, the results will be seen over time, and the quality of human resources and educational materials will make the difference. In fact, rethinking educational approaches, by more pragmatic reporting of pupils and students to the reality around us, is one of the directions of the Educated Romania project.

I appreciate the efforts made, including the concern of the Legislature to have a symbolic day of financial education. However, I believe that there is room for more and better in terms of concrete and pragmatic initiatives and projects.

As a country, we aim to make far-reaching reforms and investments that generate added value, prosperity and sustainable development over time.

Let us remember that, in the years before the pandemic, Romania had a strong pro-cyclical course, with policies based on consumption and budget deficits. The pandemic and the related economic crisis caught us unprepared in terms of public finances, with the largest deficit in the Union in 2019, a path that then favored the rapid growth of public debt.

Such policies have taken us away from strategic country goals, such as joining the eurozone, and now make the adjustments necessary for an effective fight against inflation even more difficult.

The deepening of current account deficits, the loss of competitiveness amid the energy price crisis, the sharp rise in inflation in recent months, to name just a few developments, require responsible policies and reforms to bring resilience to the economy and modernize Romania.

In the medium and long term, changing the development model means making investments a zero priority. In 2022, budget allocations of almost 7% of GDP for investment indicate a firm direction, which needs to be implemented and maintained.

The quality of economic policies, laws and governance must be based on sound economic education, which generates responsible decisions and measures, through which we can return sustainably to the area of ​​monetary stability and macroeconomic equilibria.

In this sense, because we are under the dome of the most competitive school of economics in Romania, we must remember how important is the role of economists in substantiating the right economic decisions.

Clearly, we need competitive financial and entrepreneurial skills, strong business schools and genuine economics.

For an active and responsible civic participation, including in relation to the political offers of economic solutions, it is very important that our citizens are well educated and correctly informed from a financial point of view.

Banking and financial bodies, which are in daily contact with their customers, with the citizens, can get involved and get more involved. This interaction can be well exploited through specific information programs and dialogue with customers, through joint projects with universities.

Universities have been and continue to be pioneers, with a decisive role in shaping skills for the new generations. In addition to training curricula, universities can launch visionary debates on current issues, bringing an authentic scientific background, aimed at clarifying and guiding public debate, financial decisions and, most importantly, public policies.

I know that all of this is a real priority on your agenda, for the leaders of the financial-banking industry and academia.

The forum organized today is a beginning of a road in which I trust and I want to support this approach, because it offers a real chance to all our citizens, regardless of age.

I congratulate the Financial Supervisory Authority, the Academy of Economic Studies and the Romanian Association of Banks for the initiative, and all the participants in this first edition of the Involvement Forum.

I am confident that such projects will not remain unique, and the example of good practice established today is only the first in an effective path. “

Editor: RK

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