have been useful in crafting the final rule. i expect that the final rule would, among other things, respond to the concern of some firms that the timing of the first capital planning process did not provide for appropriate capital distributions in the first quarter of the succeeding calendar year. clarifications of some other issues that arose in the 2011 capital review will be addressed in the documentation for the 2012 exercise – such as describing with more specificity what constitutes the kind of material change in the risks faced by a firm, such that a supplemental capital plan would be needed during the course of the year. it is important to note that the capital planning process, including the stress testing component, provides supervisors with the opportunity to determine whether banking organizations need to maintain capital ratios above the minimum levels specified in the various basel frameworks as implemented into u. s. law. institution - specific capital measures of this sort are explicitly contemplated in the basel arrangements, in u. s. legislation, and in the regulations of u. s. banking agencies. during the financial crisis, we used our safety - andsoundness authority to require banks to hold sufficient capital to weather the impact of the crisis and the serious recession that followed. similarly, our annual capital plan review is a bis central bankers ’ speeches forward - looking exercise that, in estimating losses and reduced revenues that would follow an adverse economic scenario, may result in requiring banks to maintain more capital than would a static, backward - looking snapshot of minimum capital levels. conclusion on a number of previous occasions, i have noted that, for all the disagreement over the right set of financial reform measures, on one point there is near unanimity : no one wants another tarp program. not those who thought tarp was the best of a bad set of options in the fall of 2008. certainly not those who opposed it. not the american people, many of whom saw the injection of billions of dollars of government capital into financial firms as more a bail - out of large banks than an imperative to stabilize the financial system. and not even, i suspect, most of the large financial firms that received the government capital. each of what i have characterized as the three threads of capital regulation reform is still in development. domestically, there are notice - and - comment rulemakings still to be done in each area. internationally, the basel committee will continue work on the indicators used in its capital surcharge methodology and, of course, has yet to finalize the

rate has been one and a quarter percent below the oecd median and our unemployment rate half a percent lower. but our per capita income has lagged behind and we ’ ve run large current account deficits. real per capita gdp growth has been one and a quarter percent, about half a percent below the median and our current account deficit has averaged five percent of gdp – about the 6th largest relative to gdp in the oecd region. there are two main ways in which our prosperity can improve over the longer run. the first is if the world is willing to pay more for what we produce. the second is by raising our labour productivity – that is by increasing the level of output per working hour. in the short term, we can generate higher income if we increase labour force participation or work longer hours. but we already have a higher proportion of our population in the labour force than nearly all other oecd economies and we work longer hours than most people in the oecd. the good news is that there ’ s strong international demand for our commodity exports. despite falling over the past 15 months, our terms of trade, or the ratio of export prices to import prices, remain 20 percent higher than the average for the 1990s. this improvement bis central bankers ’ speeches partly reflects the expansion of the global middle income class over the past two decades, led by china, and the rising demand for protein. our labour productivity story is much less impressive. since 1990, our labour productivity has grown at an annual rate of one percent, about one and three quarters percent below the seven largest oecd economies. this is the main reason why our real per capita gdp is now 25 percent below the oecd median. this is striking given the high international rankings for the quality of our institutions, control of corruption, ease of doing business, and according to the world bank, the highest per capita endowment of renewable resources in the world. so why is our per capita income so far below the oecd median? partly it ’ s due to our geographic location and small economic size. distance and economic size matter a lot even in a more globalised world of trade, capital and knowledge flows, and increasing interdependence. this also partly explains why our export range is concentrated over relatively few products – with food and beverages accounting for almost half our exports. the oecd and imf believe size and distance, which limit economies of scale and market opportunities, account for around three quarters