/ transfer system, but after taking into account the operation of pension system. the central difference between personal factor income and pre - tax income is the treatment of pensions, which are counted on a contribution basis by factor income and on a distribution basis by pre - tax income. the population is comprised of individuals over age 20. the base unit is the tax unit defined by national fiscal administrations to measure personal income taxes. the first observation is 1970 for japan and the united states, and 1980 for the european union. latest observation : 2017 for european union, 2014 for united states and 2010 for japan. diverging trends in the return on capital and on safe financial assets a further complication relates to shifts in the relation between the return on so - called safe assets ( such as highly - rated sovereign bonds ) and wider measures of rates of return, including equity returns and returns on higher - risk debt instruments. in related fashion, there has also been a shift in the relation between the returns on short - term instruments and those on longer - term instruments, with term premia that are much smaller now than in earlier periods ( or even negative ). on the one side, we have observed that corporate bond spreads have held up and estimates of the equity risk premium have increased, in both the united states and the euro area ( chart 14 ). on the other, the demand for short - term money - like instruments has surged, and the yield on those instruments has dropped to unprecedented negative values. chart 14 corporate bond spreads and equity risk premium ( percentages ) sources : for corporate bond spreads – merrill lynch, ecb staff calculations and gilchrist, s. and zakrajsek, e. ( 2012 ), “ credit spreads and business cycle fluctuations ”, american economic review, vol. 102, no 4, pp. 1692 - 1720 ; for equity risk premium – thomson reuters, consensus and ecb staff calculations. notes : corporate bond spreads for the united states before 2010 are based on gilchrist, s. and e. zakrajsek ( 2012 ), ibid. owing to historical data constraints, the equity risk premium is approximated by subtracting the real risk - free rate from the earnings yield. latest observation : october 2019. a vibrant field of research seeks to reconcile the observed divergence in rates of return across asset categories with reference to shifts in mark - ups and risk premia. this literature also highlights the increasing value attached to safe assets that offer protection against downside risks.

ability to deal with cases that might warrant corporate restructuring and change of management. · second, to introduce a scheme of credit guarantees which would provide a facility of risksharing between corporate borrowers, the government, and banks based on market mechanism. · third, to work with the management of the state banks and commercial banks to facilitate their resumption of lending without compromising the banks ’ own risk management and the bank of thailand ’ s own supervisory standards. on our part, the bank of thailand has improved the credit information system through fostering the establishment of credit bureaus, which provide the much - needed infrastructure for the resumption of new credit. meanwhile, we will continue to adhere to the best practices in prudential standards, and look to further improving the standards. let me now turn to the third challenge : rebuilding our financial architecture. this is an area that the bank of thailand takes leadership role to strengthen the soundness and efficiency of the financial institutions. our leadership must lead to outcome which makes practical sense, measures up to international best practices, and must be market - oriented and suitable to thailand. so far, we have laid down necessary groundwork to tackle short - term difficulties, such as the persisting non - performing loan problems, the lack of credit growth, or the restoration of financial sector soundness. long - term prosperity however requires more. it requires a new financial architecture and corresponding market infrastructures to foster competition and efficiency while ensuring a nonrecurrence of past problems. specifically, in the world where financial innovations, economic integration, and technological advancements bring nations and markets closer and define a new paradigm for competition for financial service industries, the rebuilding of our financial architecture becomes vital for our long - term successes, if not survival. given such a challenge, which direction are we heading? · going forward, we must improve our financial architecture to raise efficiency and ensure nationwide access to financial services. · in term of market competition, the opening up of our banking system has accelerated the transfer of technical knowledge and ensured competition for our domestic financial institutions. · in term of market structure, the new financial institutions bill – currently at the senate and is expected to be passed in the course of this year – will provide a legal and formal framework that accommodates the establishment of financial conglomerates. financial institutions will be allowed to offer varieties of financial services such as insurance or securities through their subsidiaries. though this is still a step away from universal banking model where all financial services will