Although financial literacy in Switzerland is higher compared to other countries, it also faces challenges. While many institutions and firms offer financial literacy programs, the lack of a national strategy to coordinate these programs currently stands in the way of further improvements in financial literacy in Switzerland.
What is financial literacy and why is it important?
The OECD defines financial literacy as "a combination of awareness, knowledge, skills, attitudes and behaviors necessary to make sound financial decisions and ultimately achieve individual financial well-being." Financial literacy is often measured using the so-called "Big Three" questions about interest rates, inflation and risk distribution.
Various studies have shown that low financial literacy is often associated with high debt or low savings rates for retirement. With increasing pressure on pension systems due to demographic changes and more complicated financial products, financial literacy will become even more important in the future.
Where does Switzerland stand?
Although Switzerland - along with Germany and the Netherlands - is among the top performers, the overall level of financial literacy in Switzerland is still low. Only 50% of the Swiss population correctly answer basic questions about interest rates, inflation and risk distribution. Financial literacy is particularly low among low-income or poorly educated households and among women.
Basic financial education is fairly well covered in the curricula of Swiss schools. Although personal finances are hardly ever the direct focus, they are part of a broadly understood basic economic education.
Nevertheless, there is potential for improvement, as Switzerland's scores in the PISA study, which measures the performance of the Swiss education system at the end of compulsory schooling, have tended to fall in all areas (reading, mathematics and science) since 2012.
How can financial literacy be improved in Switzerland?
Contrary to the international trend, the role of the public sector to provide basic financial education has been restrained in Switzerland. There have hardly been any broad-based surveys, school trials or campaigns to date except the canton of Ticion’s program "Il franco in tasca," which aims to prevent over indebtedness. For example, Switzerland also does not participate in the voluntary supplementary part of the PISA survey on financial literacy, which has been conducted periodically since 2012.
Germany recently launched a financial education initiative to strengthen financial literacy among the population. You can read more about it here.
In 2021, Austria launched a national financial education strategy. It is led by the Ministry of Finance, together with the Oesterreichische Nationalbank. Find out more here.
Italy has had a national financial education strategy since 2017. The Comitato EduFin was created for its implementation. It is composed of members from various government agencies and supervisory authorities, including the Italian central bank Banca d'Italia.
France has had an umbrella public financial education organization, the Institut pour l'Education Financière du Public (IEFP), known as La finance pour tous, since 2006.
Thus, unlike many other countries, Switzerland does not have a national strategy or competent authority for basic financial education. Instead, many different public and private actors - such as local debt and budget counseling centers or for-profit institutions from the financial sector, but also, for example, the Swiss National Bank (SNB) - offer educational programs on financial topics, but in an uncoordinated manner and without a national concept.
While there are efforts for informal networking, there is no systematic approach. As a result, many programs are aimed at the same, easy-to-reach target group of students, while other target groups are left out.
A national coordination of the various programs as well as more systematic evidence of their effectiveness could therefore contribute significantly to further improving financial literacy in Switzerland. In general, the data situation is rather poor and there is a need for research and data bases.
In summary, while Switzerland is considered a leader in financial literacy compared to other countries, it faces significant challenges. The lack of a national strategy and the limited coordination of the various actors, as well as the resulting one-sided focus of existing offerings, make it clear that a more comprehensive and coordinated approach would be necessary.
For a more detailed discussion of the state of financial literacy in Switzerland, see Chapter 23 ("Financial literacy and financial education in Western Europe") in the Handbook on Financial Literacy, January 2022 (Routledge Publishing House).
Professors Tabea Bucher-Koenen and Carmela Aprea from the University of Mannheim discuss the reasons why financial education is important for society in an article in the DAV KOMPASS series. They also discuss what people in Germany (don't) know about finance and which success factors are important for a good financial education strategy.
Click here for the article.