The figures for the third quarter are unlikely to be dramatically different from what we have seen so far. Unemployment is still rather stable at a relatively low level. We have, of course, started to see the first signs of a slowdown in our major markets with some companies reducing the number of work days and letting go of some employees. We are a very open economy, we depend on external demand and it is only natural that we will be affected. Has personal debt in Malta increased in the last years? As you would expect in a growing economy, household debt has been rising. It is currently estimated at € billion or 48 per cent of Malta's GDP. It was 31 per cent in 2002, but the ratio remains below the euro average of 60 per cent. The interest burden on Maltese households arising from this debt as a proportion of disposable income is comparable to the euro area average at three per cent. Are we saving more? It is unlikely. There has been a declining trend because habits and cultures change. The existence of a very extensive social safety net has acted as a disincentive to save for one's old age. It is appropriate for households to borrow funds to smooth their consumption patterns as long as this is backed by reasonable income expectations. The number of non-performing loans has been coming down for some years in the household sector though it has risen slightly recently to 2.5 per cent.
[23] This result is qualitatively in line with Joyce, M., Tong, M. and Woods, R. (2011), “The United Kingdom’s quantitative easing policy: design, operation and impact”, Bank of England Quarterly Bulletin 2011Q3 who find that “the fall in gilt yields cannot primarily be attributed to signalling effects […] Instead, it is consistent with the main effect coming through portfolio rebalancing”. Bauer and Rudebusch (2014), op. cit., by contrast, find up to one half of the US LSAP effects on yields coming through signalling, challenging earlier literature giving less weight to this channel. In addition, Broadbent (2018) op. cit. argues that the effects of asset purchases and the relative importance of the channels through which they work can vary over time. [24] Duration extraction was highlighted also as a prominent channel for the Federal Reserve’s LSAP, see the seminal paper by Gagnon, J., Raskin, M., Remache, J. and Sack, B. (2011), “The Financial Market Effects of the Federal Reserve’s Large-Scale Asset Purchases”, International Journal of Central Banking, 7(1), pp. 3-43, which stresses exactly the type of mechanism that ECB staff tried to quantify for the euro area: “The LSAPs have removed a considerable amount of assets with high duration from the markets. With less duration risk to hold in the aggregate, the market should require a lower premium to hold that risk. This effect may arise because those investors most willing to bear the risk are the ones left holding it.