Restoy links household financial health to central bank mandates

Restoy advocated better measurement of financial health and testing its use within existing central bank frameworks, not adding a new mandate.

The G20 definition covers daily obligations, shock absorption, future goals and financial confidence, extending beyond access to services.

Household distress can raise arrears and bank losses, tighten credit and weaken activity, further reducing incomes.

Conventional leverage, debt-to-income and non-performing loan measures capture accumulated vulnerabilities.

Household assessments of financial buffers may reveal strains before missed payments.

Restoy proposed using these assessments to complement, rather than replace, existing indicators and examining their early-warning value through further research.

Inflation erodes purchasing power and savings, while higher interest rates increase debt burdens, particularly on variable-rate or refinanced loans.

Restoy said household buffers and confidence influence consumption responses to policy.

Digital innovation can amplify these links.

Cryptoassets offer potential benefits through cheaper, faster transfers and mobile access, including remittances and social payments.

But volatility, fraud, limited protections and low financial literacy expose users to losses; wider access does not establish better financial health.