Regarding the concept of compound interest, however, the percentage is very close to the average observed in the OECD countries (46%) and in the EU members (44%). Nonetheless, this should serve as no consolation, since this average means that over half the interviewees do not understand a basic financial concept such as compound interest rates. The need to reinforce the general public’s financial literacy is also patent in some of the results on knowledge, holding, acquisition and use of financial products. Firstly, as far as knowledge of financial products is concerned, the Survey asks interviewees whether they have heard of the following products: (i) savings accounts, pension schemes, investment funds, shares and fixed income (all savings vehicles); (ii) life insurance and medical insurance; (iii) means of payment such as credit cards; and (iv) debt products such as mortgages and personal loans. It can be concluded from the results that there is less knowledge of savings products than of debt or insurance products. Shares and pension schemes are well known (around 90% have heard of them), but only 73% of interviewees have heard of savings accounts and term deposits and only 78% of fixed income, while the percentage of those who have heard of life and medical insurance, credit cards, mortgages and personal loans is, in all instances, higher than or equal to 95%.
In addition, and perhaps most importantly, the capital requirements have now become much more forward-looking. Each year a bank’s capital dividend and share-repurchase plan is assessed against the amount of capital the bank would potentially have under an extremely stressed economic and market environment given its portfolio of assets. The annual Comprehensive Capital and Analysis Review (CCAR) process has pushed U.S. banks to improve their capital planning processes and forced them, when needed, to retain more earnings and to build up their capital. As a result, these banks are much less risky now than they were prior to the financial crisis, when their vulnerability was masked by a high, but unsustainable, level of profitability. 1/3  BIS central bankers' speeches  On the liquidity side, there has also been significant improvement. The Liquidity Coverage Ratio and the Net Stable Funding Ratio requirements have forced banks to hold more high-quality liquid assets and have reduced the scope for maturity transformation. The ability and willingness of banks to finance illiquid, hard-to-value assets with short-term funding was an important element that contributed to the financial crisis. In addition, I believe that supervisory oversight has improved. There is more attention on horizontal evaluations across the systemically important firms and a greater emphasis on bank governance, risk management, cyber security, and bank data and technology capabilities than in the past. But the progress has not just been in terms of enhancing the strength of individual institutions. The system as a whole is also stronger because of a number of important initiatives.