Publication date: 18/01/2026

Financial literacy is widely recognised today as one of the most important drivers of economic well-being and social cohesion. In an increasingly complex economic and financial environment, citizens are required to make decisions that affect not only their personal welfare but also the stability and growth of the economy as a whole. Against this backdrop, financial literacy emerges as a cornerstone of active, informed and responsible economic participation.

Financial literacy provides individuals with access to essential financial knowledge, reduces information asymmetries, strengthens financial autonomy and promotes equal access to opportunities. It therefore serves as a powerful instrument of social empowerment and a means of reducing inequalities. Numerous studies conducted by organisations such as the OECD and the European Commission have identified a statistically significant relationship between financial literacy and indicators of inequality, including the Gini coefficient.

Financial education extends well beyond the acquisition of technical skills such as budgeting or managing banking products. It encompasses an understanding of fundamental economic principles, awareness of citizens’ rights and responsibilities, and the ability to assess risks and evaluate alternatives. A financially literate citizen is better equipped to navigate the financial system confidently and to avoid behaviours that may lead to over-indebtedness or financial vulnerability.

A financially informed citizen is not merely a consumer, but also a responsible taxpayer, saver, investor and user of financial services. When personal financial decisions are guided by knowledge and responsibility, they contribute to financial stability, sustainable growth and collective prosperity.

The importance of financial literacy becomes even more evident during periods of economic uncertainty, when individuals are exposed to heightened risks. International experience has shown that societies with higher levels of financial literacy demonstrate greater resilience in the face of economic shocks. Their citizens are better prepared to manage their finances, adapt to changing circumstances and make sound financial decisions. Consequently, financially literate societies are not only more resilient but also more competitive in the long term. Economies characterised by financial literacy, institutional stability and social cohesion are better able to weather crises while strengthening their comparative competitive advantages.

The European Dimension

At the European level, financial literacy is increasingly recognised as a strategic policy tool and forms an integral part of the Savings and Investments Union initiative. The objective is to channel dormant private savings held by European citizens into productive investments more effectively, thereby supporting economic growth, financing the digital and green transitions, and strengthening financial stability across the European Union.

On 30 September 2025, the European Commission presented the European Union’s new Financial Literacy Strategy, which recognises financial literacy as an essential life skill.

The mobilisation of private savings towards productive investment requires a solid foundation of financial knowledge. However, financial literacy levels across Europe remain relatively low. According to the 2023 Eurobarometer survey, only 18% of citizens demonstrate a high level of financial literacy, while almost half of all adults lack emergency savings. These findings highlight considerable scope for improvement if the objectives of the Savings and Investments Union are to be achieved.

Cyprus’ Contribution to the European Effort

Financial literacy is particularly important for Cyprus, a small and open economy that is often more vulnerable to international economic developments. Investment in knowledge and the financial empowerment of citizens should therefore aim to strengthen economic resilience, reduce financial exclusion and improve quality of life.

In this context, a National Strategy for Financial Literacy and Education was approved in June 2022, built around four strategic objectives: raising public awareness of the importance of financial literacy and education; equipping citizens with essential financial knowledge and skills; promoting the importance of adequate insurance and retirement planning; and strengthening understanding of digital financial products and services, as well as the risks associated with them.

To support the implementation of this strategy, the Cyprus Financial Literacy and Education Committee (CFLEC) was established under the chairmanship of the Central Bank of Cyprus, with the Ministry of Finance, the Ministry of Education, Sport and Youth, and the Cyprus Securities and Exchange Commission serving as its principal members. The Committee has been operational since June 2024.

Through the work of the CFLEC, Cyprus is aligning itself with the broader European agenda by developing and implementing initiatives designed to advance financial literacy across society.

The Cyprus Presidency of the Council of the European Union

The Cyprus Presidency of the Council of the European Union has identified five key priorities under the theme “An Autonomous Union, Open to the World.” One of these priorities is “Autonomy through Competitiveness,” within which the advancement of the Savings and Investments Union features prominently.

During the Cyprus Presidency, the Central Bank of Cyprus and the Cyprus Financial Literacy and Education Committee are advancing initiatives aimed at further promoting and strengthening financial literacy both in Cyprus and throughout the European Union.

Christodoulos Patsalides

Governor of the Central Bank of Cyprus

Chairman of the Cyprus Financial Literacy and Education Committee

Source: Central Bank of Cyprus