Financial literacy is one of the most important factors for citizens’ financial well-being, as it maximises their potential to achieve their personal financial goals. According to a significant number of scientific studies, higher levels of financial literacy are associated with adequate management of day-to-day financial issues, lower probability of over-indebtedness, better retirement planning, higher participation in financial markets, increase in employment opportunities and larger probability of earning higher wages. (see Campbell et al., 2011; Lusardi and Tufano, 2015; Lusardi and Mitchell, 2011, Van Rooij, Lusardi and Alessie 2011, Balloch, Nicolae and Philip 2015 and OECD, 2016).
Despite the importance of financial literacy in economic prosperity, levels of financial literacy around the world are quite low, both in developing and developed countries. (see Klapper, Lusardi, and van Oudheusden, 2015).
Regarding Cyprus, the experience from the stock market crisis in 1999-2000, as well as from the management of investor / consumer portfolios during the financial and banking crisis of 2013 have highlighted the issue of inadequate knowledge of basic financial concepts, lack of rational attitudes and mentalities for a large percentage of the population. At the same time, scientific research records the insufficient knowledge of Cypriots in relation to basic financial concepts. (see Klapper, Lusardi, and van Oudheusden, 2015, Andreou and Philip, 2018, Andreou and Anyfantaki, 2020).
Having in mind the aforementioned facts and taking into account the importance of financial literacy for individual and social financial well-being, the Central Bank of Cyprus (CBC) has taken a leading and coordinating role in the collective effort to promote financial literacy in Cyprus.
Specifically, the CBC has placed under its auspices the Ad-Hoc Committee for the formulation of a National Strategy for the promotion of Financial Literacy and Financial Education in Cyprus. The Committee was established following a recommendation of the Committee on Educational Affairs and Culture of the Cyprus Parliament and consists of members from the CBC, the Ministry of Finance, the Ministry of Education, Culture, Sports and Youth (MOEC), the Cyprus Securities and Exchange Commission (CySEC), the University of Cyprus and the Technological University of Cyprus.
The Ad-Hoc Committee intends to formulate and propose a National Strategy for the promotion of financial literacy and the development of financial education in Cyprus with the aim of addressing the problem holistically. Upon completion of the National Strategy proposal, it will be submitted to the Council of Ministers so that it can be adopted by the State and form the basis for its further implementation.
The results of the sample survey conducted by the CBC will play an important role in shaping the National Strategy since both the methodology and the specially designed questionnaire resulted in a wide coverage of the level of financial literacy in Cyprus. The results of the Survey provide an extensive and in-depth assessment of the level of financial literacy, while at the same time will help to draw conclusions about population subgroups, which are most in need of financial education.