With the outbreak of the COVID-19 pandemic and Beijing’s promulgation of a national security law for Hong Kong, the U.S.-China trade war has morphed and expanded into a financial war. This situation is a test not just of the policy planning of the Ministry of Finance and Ministry of Economic Affairs and the professional capabilities of the financial industry, but also of the financial strength of Taiwan as a whole. I hope that we can protect ourselves and seize the opportunities that will come when the good times return.

National financial strength is embodied in a country’s overall financial resilience, which comes from financial capital and mutual trust mechanisms. Only countries with financial resilience can withstand the current financial shocks and recover quickly afterwards. These two pillars, along with solid capital reserves, help financial institutions tolerate short-term asset volatility and maintain sound cash flow. Solid mutual trust mechanisms prevent squeezes due to panic by financial consumers, which in turn can cause greater losses and volatility.

To a large extent, the key to this mutual trust is the financial health of consumers. Insufficient overall financial literacy causes misallocation of financial resources, increasing risks and making wealth accumulation more difficult. Only with greater financial literacy will people have the tools to handle risks and improve their lives using finance. The low interest rate environment and the uncertainty of the financial war now make financial literacy more important than ever. When consumers make good financial choices, good financial institutions, products, and services will naturally emerge. Good money drives out bad. The standards of the financial industry will naturally increase overall, and financial supervision will operate more smoothly, forming a positive financial resilience cycle which creates national financial strength.

As Huan Tien-mu, the new Chair of the Financial Supervisory Commission said, “financial literacy can be used to increase the resilience of the industry.” Financial literacy has become a key task for Taiwan at its current stage of development. We can expect two major results from such education. First, people will be able to judge risks better, and select the right financial products for different stages of life to realize their dreams. Second, the public will be able to discern financial institutions’ attitudes towards sustainable finance, so that it’s not just regulators and the industry supervising them. A literate public that can distinguish between good and bad institutions will favor companies with sustainable operations, allowing them to get credit for their advantages, eventually improving the overall quality of the financial sector.

The international political and economic environment is a difficult one, requiring every ounce of Taiwan’s financial strength, which in turn relies upon education. Now is a great time to think more deeply about Taiwan’s financial education to create a more prosperous future.