On Tuesday, 30 September, the European Commission unveiled its Financial Literacy Strategy, a major initiative to advance the Savings and Investments Union (SIU), providing EU citizens with the tools to take control of their financial future. This initiative focuses on enhancing financial literacy at every stage of life while introducing a new tool called Savings and Investment Accounts (SIAs). These accounts are designed to simplify and increase accessibility to investing for all individuals. The plan aims to empower citizens to manage their finances more effectively, build wealth, and contribute to economic growth in Europe.
A 2023 Eurobarometer survey found that less than one-fifth of EU citizens have a high level of financial literacy. This lack of knowledge can make it difficult for individuals to budget effectively, save for the future, and understand the risks and opportunities associated with investments. To address these gaps, the European Commission has introduced a strategy aimed at equipping citizens with the necessary knowledge and skills to make informed financial decisions, ultimately enhancing their financial security and independence.
Moreover, the Commission is also seeking to turn citizens’ savings into productive investments. EU citizens currently enjoy one of the highest savings rates globally, but much of their money remains in bank deposits, which typically offer low returns. By moving some of these savings into investments, citizens can not only build their personal wealth but also provide financing for businesses, driving economic growth and creating jobs, a core objective of the Savings and Investments Union.
To bridge this gap, the Commission is recommending a blueprint for Savings and Investment Accounts (SIAs). These accounts, offered by authorised financial services providers, are specifically designed to enable everyday people to invest in capital market instruments like shares, bonds, and investment funds.
To accomplish this goal, the SIA framework included in the strategy recommends that SIAs should be simple and flexible, allowing investors to open multiple accounts and transfer their portfolios easily. SIAs should also offer a wide variety of investment products, allowing citizens to diversify their portfolios. Finally, the Commission sees tax incentives as a crucial component for encouraging broad participation.
This new package represents a significant step towards creating a more financially literate and investment-savvy Europe. By enhancing citizens’ skills through the Financial Literacy Strategy and providing a simple, accessible tool like the Savings and Investment Account, the EU is empowering its citizens to achieve greater financial independence and security. The Commission will now work closely with Member States to implement the strategy and monitor the uptake of the SIA recommendation.
