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Finance Minister Pravin Gordhan says “greediness” by major banking institutions was partly to blame for the global financial turmoil.
Speaking at the KwaZulu-Natal financial literacy conference in Pietermaritzburg yesterday, Gordhan likened the banks – especially the global ones – to “greedy monsters” that put profits before the wellbeing of the people they were supposed to serve.
This was in reference to the saga implicating senior Barclays Bank executives in the manipulation of the interbank lending rates for their own financial gains.
Gordhan said the sector had to be careful of the way it conducted business, especially the way it allowed individuals and businesses to incur debt with little care for whether the borrowers would be able to pay back the loans.
He said that the recent Barclays scandal exposed the moral and ethical problems facing the financial sector.
“It illustrates dishonesty, manipulation of prices and information, profiteering at any costs, and little regard to the ordinary people and the cost to them,” he said.
Gordhan said the Treasury had penned a policy document aimed at ensuring consumer protection while strengthening the regulation of the financial sector. He added that the more financially literate the public was, the less vulnerable it would be to unethical conduct by financial institutions.
“Our own ordinary people need to be aware… about how financial institutions at the moment have turned into really greedy monsters, who want to chase profits at any cost and who do not want to get the right balance between getting profits and making sure that they do it with the right set of ethics, morality and the right principle,” he said.
He said that as witnessed during the 2008/09 financial meltdown, the financial sector had become so big and critical to the global economy and to the economies of countries.
Financial literacy should be linked to economic literacy and financial inclusion.
“Economic literacy includes understanding the country’s economy, access to knowledge and information about the economy and understanding of how modern economy works. Financial inclusion is to help people make good judgment about their finances.”
The 2012 Global Financial Literacy Barometer ranked South Africa 25th out of 28 countries, based on a survey of citizens’ financial literacy.
“While South African respondents in general seem to have budgets, they scored very low when it comes to savings and talking to their children about money management matters,” Finance MEC Ina Cronjé told the conference.
She said the conference would help shape the future of financial education in KZN and elsewhere in the country.
Premier Zweli Mkhize said initiatives addressing financial literacy were long overdue.
He stressed that financial literacy was not only important to the common man, but also to officials in senior management.