Financial literacy: The hidden infrastructure of capital markets

Europe is among the regions with a high level of household savings, yet at the same time shows exceptionally low household participation in capital markets. According to available data and analyses related to the European Commission's Savings and Investments Union (SIU) initiative (building directly on the earlier Capital Markets Union "CMU") a large share of approximately €10 trillion in private savings across the EU is held in low-interest bank accounts. This results in a loss of real value for households and represents underutilised capital for the broader economy. Only 24% of Europeans own any investment product, such as bonds or shares.

This paradox is not primarily the result of a lack of financial products, but rather of households' ability to understand basic financial concepts and to form realistic expectations about their financial decisions. Financial decision-making can not be reduced solely to inflation protection or the trade-off between returns and risk. It also requires taking into account investment time horizons, generational wealth planning, retirement adequacy, and the broader economic context, including geopolitical developments, market trends, and technological change.

Data from OECD/INFE show that low financial literacy is a global and structural challenge that affects even advanced economies. Only about 34% of adults globally and 39% in OECD countries reach a minimum target level of financial literacy. The average financial literacy score in OECD countries stands at around 63 out of 100, with a significant share of the population possessing only basic knowledge. While 84% of adults report understanding the concept of inflation, only 63% are able to apply it correctly in real-life decisions, and just 42% understand the principle of compound interest, which is essential for long-term saving and investing. This gap between conceptual awareness and practical application significantly weakens households' ability to preserve the real value of their savings in an environment of elevated inflation.

The 2023 Eurobarometer survey confirms these findings at the EU level, showing that only about 18% of EU citizens achieve a high level of financial literacy, with substantial variation across Member States. In countries such as the Netherlands, Denmark, or Finland, around 40% of the population reaches a high level of financial knowledge, while in Southern and South-Eastern Europe the share is often below one fifth. The pattern is consistent: lower financial literacy is associated with a higher share of savings held in cash or current accounts and with lower household participation in capital markets.

It is therefore no coincidence that financial literacy has moved to the centre of policy attention within the Savings and Investment Union. In September 2025, the European Commission presented a strategy whose objective is not to "teach people how to invest", but to reduce financial vulnerability and improve the quality of decision-making related to savings, indebtedness, and long-term financial planning. From a policy perspective, this is a prerequisite for broader retail participation in capital markets and a tool for mobilising private capital to support economic growth, innovation, and the green transition.

Particular attention in this discussion should be paid to older people, who represent one of the most financially vulnerable yet simultaneously most asset-rich segments of the population. Analyses by the National Bank of Slovakia show that financial literacy declines significantly after the age of 60, even in basic areas such as interest rates, inflation, and risk, despite the fact that seniors hold, on average, the largest share of accumulated financial assets and exhibit very low levels of indebtedness. The combination of lower financial and digital literacy, limited access to online services, and more frequent exposure to complex financial offers makes this group especially susceptible to unsuitable investment decisions or misleading advice. In the context of population ageing, financial education for seniors is therefore not merely a social issue, but a key factor in protecting household savings and safeguarding capital-market stability.

Empirical evidence suggests that financial education is most effective when it is systematic and begins at an early age. The example of Sweden indicates that a combination of mandatory financial education in schools and simple, tax-advantaged investment accounts can significantly increase household participation in capital markets. Nearly half of Swedish households now own an investment product - almost twice the EU average. This, in turn, translates into deeper capital markets, improved corporate financing, and higher long-term public revenues.

At the same time, the risk is growing that financial education may turn into a marketing tool for commercial interests. The boundary between independent education and the sale of financial products is increasingly blurred, particularly on social media - a development also recognised by supervisory authorities across the EU. Concrete measures to address this trend already exist, although their scope remains uneven:

• Slovakia: The National Bank of Slovakia has repeatedly warned about the risks posed by so-called finfluencers who provide financial or investment recommendations without appropriate licensing, expertise, or transparent advertising disclosure. The NBS urges the public to verify information sources and highlights that misleading advice can lead to financial losses, particularly in investments and crypto-assets.
• European Union: The European Commission has launched the Influencer Legal Hub to help content creators navigate consumer-protection rules, especially the obligation to clearly label paid promotions. General rules on unfair commercial practices also apply, requiring advertising to be clearly identifiable and not misleading.
• United Kingdom: The Financial Conduct Authority (FCA) goes further, requiring financial promotions on social media to be authorised and communicated in a clear and fair manner. Unauthorised financial promotions may result in sanctions and, in certain cases, criminal liability.

These examples illustrate that without clear rules, public oversight, and independent educational content, financial education can easily turn into a sophisticated sales channel, undermining public trust and the very objectives of financial literacy. This underscores the crucial role of public institutions in setting standards, certification frameworks, and providing content that is accessible, free of charge, and commercially neutral.

In the Slovak context, this role has long been fulfilled by the National bank of Slovakia, which adopted a Financial Literacy Strategy in 2019 aimed at systematically raising public awareness, improving coordination of educational activities, and progressively measuring financial literacy among the adult population. The strategy is grounded in the recognition that low financial literacy increases household vulnerability, encourages excessive indebtedness, and weakens resilience to economic shocks. At a practical level, the NBS also supports free and independent financial education through the "5peňazí" initiative, which provides finance courses for various target groups without links to the sale of financial products, thereby strengthening public trust and promoting more responsible financial decision-making.

Without stronger financial literacy, the Savings and Investments Union may remain a project with limited real-world impact. While accounts and products can be created quickly, trust, understanding, and an investment culture develop only gradually. Nearly half of Europeans lack sufficient financial reserves to cover basic living expenses for at least three months, about 16% have no savings at all, and according to OECD data only around 54% of adults would be able to absorb an unexpected expense equivalent to one month's income without borrowing. These patterns are also observed in several advanced Western European economies and are consistent with the situation in Slovakia, where financial literacy remains below the OECD average and a significant share of households lacks adequate financial buffers. For many households, the key constraint is therefore not the choice of investment product, but the ability to maintain financial stability in the face of everyday shocks such as rising prices, higher interest rates, illness, or temporary income loss. In this environment, financial literacy is less about investing and more about basic economic resilience - budgeting, debt management, and protecting the real value of savings.

OECD FACT BOX: Financial literacy in numbers (2023) 

• 39% of adults in OECD countries reach the minimum target level of financial literacy (≥ 70 out of 100)

• 63 / 100 – average financial-literacy score across OECD countries

• 84% of respondents understand inflation, but only 63% can correctly apply the concept of the time value of money

• Only 42% of adults understand compound interest

• 54% could cope with an unexpected expense equivalent to one month's income without borrowing

• Less than half of the population could sustain themselves without income for at least three months

• Slovakia: financial-literacy levels remain below the OECD average, alongside low household financial buffers

Without stronger financial literacy, the integration of capital markets will remain largely a formal exercise rather than a functional component of household economic decision-making.

Sources:

1. EURONEWS: Where in Europe are people the most financially literate? 12/2023 https://www.euronews.com/business/2023/12/18/where-in-europe-are-people-the-most-financially-literate 
2. EUROPEAN COMMISSION: EU to boost financial literacy and investment opportunities for citizens, 09/2025 https://finance.ec.europa.eu/publications/eu-boost-financial-literacy-and-investment-opportunities-citizens_en 
3. EUROPEAN COMMISSION: European consumer law and influencer marketing: An introduction to the Influencer Legal Hub, 11/2023 https://commission.europa.eu/live-work-travel-eu/consumer-rights-and-complaints/influencer-legal-hub_en 
4. FCA: FCA leads international crackdown on illegal finfluencers, 06/2025 https://www.fca.org.uk/news/press-releases/fca-leads-international-crackdown-illegal-finfluencers 
5. NBS: 5peňazí – finančné vzdelávanie od Národnej banky Slovenska https://5penazi.sk/ 
6. NBS: Informácia pre poskytovateľov služieb kryptoaktív využívajúcich finfluencerov, 03/2025 https://nbs.sk/aktuality/informacia-pre-poskytovatelov-sluzieb-kryptoaktiv-vyuzivajucich-finfluencerov/ 
7. NBS: Seniori a finančná gramotnosť, 04/2021 https://nbs.sk/aktuality/seniori-a-financna-gramotnost/ 
8. NBS: Stratégia Národnej banky Slovenska na podporu finančnej gramotnosti, 10/2019 https://www.nbs.sk/_img/documents/_ts/191107/nbs_strategiafingram_2019.pdf 
9. NBS: Upozornenie NBS: Pozor na investovanie podľa finfluencerov! 03/2025 https://nbs.sk/aktuality/upozornenie-nbs-pozor-na-investovanie-podla-finfluencerov/ 
10. OECD: OECD/INFE 2023 international survey of adult financial literacy, 2023 https://www.oecd.org/content/dam/oecd/en/publications/reports/2023/12/oecd-infe-2023-international-survey-of-adult-financial-literacy_8ce94e2c/56003a32-en.pdf 

Images: Gettyimages, Eurobarometer/European Commission, EAST (European Association for Secure Transactions), Freepik, NBS, Adobe Stock, Europrospects