Cyprus tech-savvy but cash-clueless? CySEC official calls for urgent reform

Digital financial literacy must begin early, as children in Cyprus and beyond are already immersed in a world of invisible and instant money, according to Cyprus Securities and Exchange Commission (CySEC) officer Elena Karkoti.

In a comprehensive piece of analysis highlighting the urgency of the issue, she argued that digital finance is already embedded in young people’s daily lives, making early understanding essential rather than optional.

She pointed out that in Cyprus around 75 per cent of transaction volume is carried out through cards and other non-cash instruments, according to the Central Bank of Cyprus, meaning that cash is no longer the default for everyday transactions.

Karkoti pointed out that “for children and teenagers, money is already invisible, instant, and embedded in apps, games, subscriptions, and online platforms they use daily”.

“The question is no longer whether young people will use digital money. They already do. The real question is whether they will understand it,” she said.

Drawing on data from the Organisation for Economic Co-operation and Development, she stressed that across OECD countries 96 per cent of people have made or received a digital payment, confirming that digital finance is now the norm rather than the exception.

However, she warned that understanding has not kept pace with usage, citing OECD research showing that around 40 per cent of adults who use digital payments do not meet a minimum digital financial literacy benchmark.

In Cyprus, she mentioned, the OECD found an average digital financial literacy score of just 44 out of 100, with only about 10 per cent reaching a basic safety threshold, figures she said expose users to higher risks of fraud and poor decision-making.

“In simple terms, people are using digital money every day without fully understanding how it works, what data they share, or what risks they face,” she said.

“Teaching children and teenagers how digital money functions is therefore not optional. It is a basic life skill,” she added.

She further stated that only about 15 per cent of people in Cyprus understand that personal data shared online can be used to target them with tailored financial offers or scams, while just 18 per cent know that cryptocurrencies do not have the same legal status as cash.

This low awareness, she cautioned, leaves digitally confident but financially inexperienced young users vulnerable to manipulation.

She also cited research from the Cyprus University of Technology (Tepak), indicating that around 60 per cent of the population lacks basic financial literacy, including understanding risk, inflation and debt.

Findings from CySEC further show that 22 per cent of investors invested solely based on online advertisements or influencer recommendations, underlining the powerful influence of digital environments.

“If we tend to think in terms of piggy banks and pocket money, while our kids are navigating a world of tokens, trading apps, and crypto-assets, we are dangerously behind,” she said.

She argued that unless policymakers rethink how and when digital financial literacy is taught, young people risk being left unprepared for the financial realities they already face.

Citing OECD PISA data, she said that about one in five students fail to reach basic financial proficiency and struggle with everyday financial decisions, including those made online, a challenge intensified by digital platforms that encourage frictionless and impulsive spending.

She also cited research by Panayiotis C. Andreou, involving 881 university students, which found that only 36.9 per cent of them demonstrated good financial knowledge and just 6.24 per cent answered all basic questions correctly.

A separate study by the University of Cyprus, led by Andreas Milidonis, showed that structured financial literacy courses significantly improve knowledge and can even influence parents’ financial decisions, highlighting both direct and indirect benefits of early education.

“These findings confirm that financial knowledge gaps are widespread and persistent across age groups,” she said.

“Early guidance matters,” she continued. “Attitudes toward spending, saving, and risk are shaped young and directly influence long term financial wellbeing.”

“Confidence coupled with basic money skills become a powerful shield. A financially confident youngster or adult is far less likely to be influenced by promises of seductively high returns,” she said.

What is more, she explained that higher financial literacy is associated with lower vulnerability to fraud, greater confidence in using digital financial tools and stronger participation in the digital economy.

In Cyprus, research by the University of Cyprus shows that less than 40 per cent of participants were able to handle unexpected expenses without borrowing, while more than half lacked a three-month financial buffer, outcomes she said reflect habits and decision-making patterns formed early in life.

She argued that financial independence starts with knowledge, not income, stressing that digital financial literacy teaches young people how to make informed choices, recognise manipulation, resist pressure and plan ahead.

“Waiting until young people earn their first paycheck to teach them about digital finance, we risk leaving them unprepared for the financial realities they already face,” she said.

She further maintained that true financial independence is defined not by how much money someone has, but by how well they understand and manage it.

Turning to the role of education, she described schools as essential equalisers, noting that OECD research shows students from disadvantaged backgrounds consistently score lower in financial literacy, perpetuating inequality across generations.

For this reason, she pointed to the national strategy for financial literacy and education in Cyprus, which established the introduction of a dedicated standalone basic money skills lesson within the national curriculum as a core priority.

“Only systemic, curriculum-based education can guarantee that no child is left behind,” she said.

She explained that CySEC supports this strategic direction through targeted financial literacy initiatives for school children and youth.

These include interactive workshops delivered at schools, online awareness campaigns and age-appropriate educational materials for educators.

She underlined that such actions complement but cannot replace a formal curriculum-based lesson.

“If we wait until young people have money to teach them how to protect it online, we have already failed them,” she stated. “Digital financial literacy is not just preparation for adulthood. It is immediate protection. It is empowerment. It is prevention.”

“The time to equip young people to navigate digital finance safely is now,” she concluded.