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on Financial Literacy and Education |
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Issue of 2026–04–27
five papers chosen by Viviana Di Giovinazzo, Università degli Studi di Milano-Bicocca |
| By: | Filippin, Maria Elena (Central Bank of Ireland and Uppsala University) |
| Abstract: | This paper examines how household-targeted government policies influence financial market participation conditional on financial literacy, focusing on potential Central Bank Digital Currency (CBDC) adoption. Due to the lack of empirical CBDC data, I use the 2012 introduction of retail Treasury bonds in Italy as a proxy to study how financial literacy affects households’ likelihood to engage with a new government-backed retail instrument. Using the Bank of Italy’s Survey on Household Income and Wealth, I show that households with some but low financial literacy are more likely to participate in the Treasury bond market than other groups following the introduction of the new instrument. Based on these findings, I develop a theoretical model to study how financial literacy affects CBDC demand through portfolio choice - low-financially literate households with limited access to risky assets allocate more resources to CBDC, while high-financially literate households use risky assets to safeguard against income risk. |
| Keywords: | Central Bank Digital Currency, Financial literacy, Government policies, Market participation, Treasury bonds. |
| JEL: | E42 E58 G11 G18 G53 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:cbi:wpaper:05/rt/26 |
| By: | Maria Chiara Cavalleri; Ivania García-Cascante; Andualem Mengistu; Andualem Mengistu; Gerardo Uña; Mona Wang |
| Abstract: | This paper evaluates the impact of Costa Rica’s adoption of SUPRES, a digital treasury platform that centralizes and automates cash transfer payments for social assistance programs. While most GovTech literature has focused on service delivery improvements, the effects of digitalization on treasury operations remain largely unexplored. Addressing this gap, we provide an empirical assessment of how GovTech reforms support treasury efficiency by improving cash management and reducing opportunity costs of borrowing for treasury. Using administrative data and survey evidence, this analysis finds that average lead times for the analyzed social cash programs fell with the adoption of SUPRES - from 9–13 days before the reform to 2-3 days after-, generating estimated opportunity cost savings for the Treasury exceeding USD 4 million, at a relatively low implementation cost, highlighting the strong value-for-money of this reform. In 2020, the pre-SUPRES opportunity cost was about 1.1% of total domestic short-term interest payments, underscoring the importance of digital treasury reforms for managing liquidity. Although the savings are modest compared to GDP, they are significant for treasury operations, especially during tight cash periods. Survey responses from administrative staff indicate enhanced operational efficiency, transparency, and inter-institutional coordination following SUPRES adoption. Beyond treasury efficiency gains, the reform also strengthens targeting, expands financial inclusion, and supports the diversification and resilience of the social payments ecosystem by enabling a multi‑bank payment model. Overall, the analysis shows how relatively low‑cost digital treasury reforms can deliver meaningful efficiency gains in cash management while generating broader operational and financial inclusion benefits. |
| Keywords: | GovTech; public financial management; chash management; social assistance; digital treasury reform; Costa Rica; SUPRES |
| Date: | 2026–04–10 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/077 |
| By: | Bucher-Koenen, Tabea; Wallossek, Luisa; Winter, Joachim |
| Abstract: | Default settings strongly increase pension enrollment, especially when savings incentives are high and choices are complex. We show that the effect is weaker when incentives are low, options are simple, and opting out is easy. We study the nationwide introduction of auto-enrollment for low income employees in Germany's public pay-as-you-go pension system. We find that automatic enrollment raises participation by 23 percentage points, though most individuals actively opt out. Linking administrative and survey data shows that the default effect is stronger when enrollment incentives are higher and among individuals who lack knowledge of their enrollment status. |
| Keywords: | Default-Setting, Auto-Enrollment, Pensions, Financial Literacy |
| JEL: | D14 H55 J26 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:340111 |
| By: | Bo Li; Mr. Tommaso Mancini-Griffoli; Mr. Marcello Miccoli; Brandon Joel Tan; Ms. Longmei Zhang |
| Abstract: | Payment stablecoins are privately issued digital money with the potential to enhance payment efficiency, foster innovation, and improve financial inclusion. At the same time, they are vulnerable to runs and associated welfare losses. One way to lower run risk is to require stablecoin issuers to hold safe assets. But doing so may lower issuers’ profitability and thus their incentive to provide stablecoins, hampering payment innovation and product variety. This paper offers a theoretical framework to navigate the tradeoff between maintaining stability and incentivizing issuance. Based on the Diamond and Dybvig (1983) model of bank runs, the paper shows that an unregulated private equilibrium is suboptimal. Stablecoin issuers hold risky assets to maximize profits, increasing run risk. A social planner can improve the equilibrium by requiring the backing of stablecoins with a safe asset (such as central bank reserves in a narrow bank setting), and creating conditions for other sources of revenue for issuers (such as central bank reserves remuneration or policies for payment data utilization). The model offers a baseline for the ongoing policy discussion while identifying considerations for further study. |
| Keywords: | Stablecoins; reserve backing; digital money; Stablecoin issuer; stablecoin issuer; payment innovation; payment efficiency; issuers' profitability; International reserves; Bank deposits; Commercial banks; Financial statements; Global |
| Date: | 2026–04–10 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/074 |
| By: | M. Tedde |
| Abstract: | This paper examines the effectiveness of the warning signal, as imposed by MiFID, in limiting excessive trading of not literate investors, and the impact that the broker's misconduct can have on this effectiveness. Our theoretical model suggests that an effective warning signal limits excessive demand for risky assets, making decrease transaction costs, thereby reducing broker's profit. Investors' payoff increases in the effectiveness. Broker's misconduct negatively affects the effectiveness of the warning signal, making increase investors' demand for risky asset and transaction costs, which entail a higher profit for the broker. Investors' payoff decreases in misconduct. We then test these propositions empirically using a unique brokerage dataset. Our findings reveal that an effective warning signal involves that not literate investors trade less and pay lower transaction costs, but we do not find evidence supporting the notion that their performances increase in the effectiveness of the warning signal. Investors who suffer broker's misconduct engage in more frequent trading and incur higher transaction costs, with both effects increasing as misconduct level rises. |
| Keywords: | Warning Signal;Broker's Misconduct;MiFID Directives;financial literacy;Investors Behavior |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:cns:cnscwp:202602 |