GET EDUCATED BEFORE YOU GET MISINFORMED AND POOR
Dr Wolfs congratulates BA School in Riga with its 20 years of existence as Latvian State School of Finance and Banking!
20 years of Banku Augstskola, CONGRATULATIONS!
A couple of years ago; i had the chance to meet one of the founding members of BA. This Swedish gentleman told me about the start of the school, the role of the lecturers in painting classrooms and the first students. Today, it is a different environment and a great school which we can only admire. BA School has become a real agent of change in the Latvian Society, change for a different approach; change for a different society and helped to increase the financial literacy. This is highly valuable in a more and more complex world. The OECD defines financial literacy as the ability to understand finance, and it is mostly related to personal finance. People should understand how to do savings; what the risk of taking credits, how to wisely invest their money for future years. Based upon several surveys from the EU Commission; we can see that the financial literacy in the EU is still relatively low. Citizens in most countries do not see the links between risks and return.
It is difficult to make money, but it is even more complex to manage your wealth. Some of the old sayings still keep value, never put all your eggs in the same basket is one of them. Globalization has made the world to a small village, because we are all connected thanks to technology. On the other hand, inequality and complexity have increased over the years. If we look at the near future only in Europe, the month of September will be decisive for the future of the Eurozone. The Euro is not in crisis, but we have a European debt crisis with a European Union as a result. There are numerous reasons for that, but the financial markets expect majorly three answers from the decision-makers. Firstly, they want to know from the European Central Bank (ECB) what is their real plan and what are they going to do. As concrete as possible. Secondly, they want to know what are the conditions for Spain and Italy. How will the Eurozone adjust its fiscal and monetary policy. Thirdly, how do they handle the issue of subordination. So far, the southern European countries have been reluctant to ask help from the IMF, because each time the IMF comes into the picture, the private capital goes out of the country. Greece is another example of that. And if you want to reset the economic button, you need not only to cut costs, but also create growth and therefore you need the private sector and private capital.
Due to the European debt crisis, Switzerland continues to accumulate reserve capital. In June, we exceeded 10% of the Swiss GDP, due to the uncertainty within the Eurozone. Despite this tremendous capital accumulation, Swiss banks need to strategically re-orient themselves. Jobs are expensive in this country, and constantly new skills are needed. We used to take advantage of the Swiss banking secrecy, but under the pressure of the OECD we have to adopt our strategy. As a result of all these factors, the Swiss franc is currently over valued and that asks to have innovate and creative entrepreneurs. The once who do succeed, are wealth creators and the financial literacy comes again into the picture.
BA School has educated over the past 20 years thousands of students who understand the world of finance, who are aware of risks and are covered not to lose their fortune.
I wish BA School all the best for the next century of its existence and a happy birthday party. It is great to have you as a respected and strong academic partner. Keep on having teaching fun!