Finland aims to end the growing indebtedness of households, caused by low interest rates and the digitalization of credit services. To do this, it will improve the financial education of its citizens.
According to the Bank of Finland, household indebtedness in relation to their income is higher than ever and already reaches an average of 127%, a trend that poses a threat both to the prosperity of citizens and to the national economy. Housing expenditure represents about 60% of the total debt of Finns, especially in the form of mortgages and loans through neighboring communities, an increasingly popular modality. Low interest rates have triggered the demand for mortgage loans. In addition, the delinquency of households records figures never seen before, 7% of the population is so indebted that they cannot take care of their payments.
The first phase to achieve this improvement will be to analyze the level of economic knowledge of its citizens and the information currently available on the subject. The next step will be to develop a mechanism that allows for continuous evaluation of consumer behavior in financial markets and to establish a strategy at the national level, which includes authorities, banks, experts, Non-Governmental Organizations (NGOs), private companies and unions. “The indebtedness has to do with the way payments are made in the Nordic countries, because the whole process of paying for purchases has become literally invisible,” says Hellström, communication director of the Bank of Finland. “What we see is that, especially among young people, but also in other sectors of the population, sometimes it happens that you lose a little of the account of how much you really spend, paying is so easy that you don’t pay much attention to it anymore” he added.
Despite having one of the best and most enviable education systems in the world, the authorities in Finland think that the population does not receive a financial education good enough for all its citizens to make economically sustainable decisions.