to debt, equity is a more expensive source of funding to a bank given the structure of our laws and markets, the presence of deposit insurance and other government support, and other factors. see, e. g., franco modigliani and merton h. miller, " the cost of capital, corporation finance and the theory of investment, " the american economic review 48 ( june 1958 ) : 261 – 297, and ron j. feldman, gary h. stern, and paul a. volcker, too big to fail : the hazards of bank bailouts ( washington : brookings institution press, 2009 ). 4 the g - sib surcharge is an additional layer of capital just for the g - sibs, and it is measured on several factors of each g - sib, specific to their individual risks. 5 to the extent that such a firm has large trading operations, it would also be subject to the revised market risk framework. 6 with regard to the adjustments to address window dressing and cliff effects, these will have a one - time impact on banks that carefully manage their operations to lower surcharge buckets, but should improve the efficiency and risk - sensitivity of the measure over time. 7 the re - proposal would update the method 2 coefficients to reflect changes from 2015 until the present using a methodology that is consistent with the board's original calibration in 2015. specifically, the supplemental proposal would update the method 2 coefficients for each of the systemic indicators for the size, interconnectedness, complexity, and cross - jurisdictional activity categories from 2015 until the present using the most recent available two - year average of aggregate global indicator amounts and the corresponding three - year average of euro / u. s. dollar exchange rates. going forward, it would also include a mechanism to annually adjust the method 2 coefficients for each of the systemic indicators for the size, interconnectedness, complexity, and 7 / 8 bis - central bankers'speeches cross - jurisdictional activity categories based on u. s. inflation and real economic growth. this mechanism would use a three - year moving average of annual nominal u. s. gross domestic product ( gdp ) growth to adjust these coefficients on an annual basis. 8 / 8 bis - central bankers'speeches

timothy geithner : us and the global economy remarks by mr timothy geithner, president and chief executive officer of the federal reserve bank of new york, at the asia society ’ s ceo forum, new york, 19 october 2005. * * * i want to focus my remarks today on the imbalances in the world economy and their implications for the united states and asia. these imbalances, which are most visible in the u. s. current account deficit, present challenges — and risks — for the world economy. how we manage these challenges will have significant implications for our economic future and for the rest of the world. the sources of these imbalances are varied and complex. they are the result of fundamental changes in the world economy, changes not anticipated and not fully understood. they involve economic forces across the global economy, some transitory and some probably more enduring. the imbalances took a long time to build up and they will probably take a long time to unwind. the magnitude and persistence of these imbalances seems to be the result of the interaction of two forces. the first involves a decline in u. s. savings relative to domestic investment, matched by an increase in savings relative to investment in parts of the rest of the world, principally in emerging asia and the major oil exporters. in the united states, public savings and household savings fell, while investment spending stayed reasonably strong and housing investment very strong, even during the latest recession. in the economies that became large net savers, the pattern differed across countries. in some countries, including much of emerging asia and japan, savings has been flat or fallen somewhat, while investment has fallen by more. in china and in the major oil exporters, investment spending is rising, but not by as much as savings is increasing. europe ’ s net external position has not changed much over this period, and is in rough external balance overall, with substantial differences across the member states. the second feature of this dynamic has been an increase in the willingness of the rest of the world to invest its savings in the united states. in those parts of the world where savings are high, they have become more globally mobile. and a greater share of those savings found its way to the united states. this phenomenon is due in part to the perceived attractiveness of relative returns in the united states arising from the acceleration of productivity growth here, and in part due to the dynamics associated with exchange rate regimes linked in one way or