“ So we've heard and read about the different variables that affect the lending interest rates but having taken those into account - dealing with finances is often found to be a stressful task for the people and businesses in Tonga, even when things are going well.
At the heart of financial stability is the financial literacy of the country – and to echo the sentiments of ‘teach a person to fish and you feed them for a lifetime’ is not a variable that has been mentioned in these articles.
Financial literacy and investor education are becoming an integral part of ongoing financial stability. By strengthening financial resilience, capabilities and to develop a savings habit, financial literacy enables people and businesses in Tonga to be more confident and informed in the way they interact with industry participants and engage with financial products and services. It helps them to understand their right and responsibilities in relation to their financial decisions.
Financial illiteracy and an excessive push by banks to increase their customer base among the low-income population could result in credit bubbles and bad loans. A pro-active government role is therefore imperative to ensure that appropriate regulatory and supervisory mechanisms are in place and sound practices are followed – imperative to improve financial literacy more broadly and ensure regulation is fit for purpose.
Credit given to ANZ Bank which has rolled out a valuable program – MoneyMinded, which is an adult financial literacy program which aims to deliver financial education that has a fundamental impact on financial literacy levels. This program was run earlier in the year here in Tonga as a workshop.
The MoneyMinded program aims to help participants by improving savings behaviour; moving away from ‘making ends meet’; coping with unexpected expenses; setting longer-term goals; informed financial decision-making.
Financial literacy is relevant to developing monetary policy. In theory, greater financial literacy makes monetary policy more affective because greater proportions of the population feel the impact of interest rates. That is, more people become borrowers and lenders – good for banks and improved profitability and great for customer satisfaction.
Again, echoing the sentiments of ‘teach a person to fish and you feed them for a lifetime’. ”