expenses in excess of revenues. its business model is now financially sustainable, as it ensures solid income generation to bear future needs. coverage of direct and indirect costs of lending, including expected loan losses, is achieved while maintaining loan terms well below market rates. higher rates on loans that tie up the bank ’ s capital for longer periods of time will help prevent scarce longterm funds from being diverted to operations that are better served by shorter term loans. the needs of the poorest and most vulnerable are the principal claim on ibrd resources. accordingly, we favor the establishment of a framework that explicitly takes it into account, with adequate consideration of preservation of the real value of the ibrd ’ s capital over time. higher terms for clients with larger capacity will help accomplish the mission of supporting the neediest. financial sustainability does not ensure efficiency in resource utilization. we encourage management to continue fostering efficiency and monitoring it by means of sound indicators. the “ voice ” of the global economy we remain committed to a shareholding review that fully reflects the changing reality of the global economy and strengthens the bank ’ s development mission, as agreed to at the 2015 annual meetings. the dynamic formula provides a necessary anchor to ensure, over time, adjustment towards an equitable voting power in the ibrd. we also look forward to a review of the ida voting rights arrangements, which ida deputies agreed to discuss at the upcoming mid - term review of ida18. concerning the share allocation rule for the ibrd selective capital increase ( sci ), we believe ad hoc solutions and arbitrary thresholds should be avoided as much as possible. we agree on the use of unallocated shares – as a one - off measure – to limit extreme cases of under - representation. this will reduce the need for additional scis in the future. today ’ s proposed arrangement for the ibrd is far from optimal, as we will presumably need several scis to bring shareholding closer to the dynamic formula ’ s outcome. as for the ifc, we recommend moving its shareholding towards that of the ibrd. hence, we support the proposed sci, in which shares are allocated to countries with ifc shareholding below their ibrd shareholding, after converting retained earnings into shares. although some concerns remain regarding the size of the capital package and its bias toward the general capital increase, we recognize that the overall outcome will further strengthen both the financial sustainability and the operational capacity of the ibrd and ifc. this will bring the discussions that

of education is vital to improving the capacity of our citizens to manage the challenges that come from global competition, rapid technological change, and the greater share of the risk they now bear for saving for retirement. the average american with a college degree earns twice as much as his neighbor without a college education, which is about twice the premium that existed 40 years ago. improving access to educational opportunity for all our citizens, regardless of race or the economic fortune of their parents, is critical to the credibility of the american ideal of equality of economic opportunity. as larry summers has noted, in our country today, a student whose parents are among the richest quartile of american is six times more likely than one from the poorest quartile to graduate with a b. a. within five years of leaving high school. and improving the capacity of our present and future tax payers to make informed judgments about economic policy is important to improving the quality of policy decisions by our elected officials, national and locally. this is vital in an era where we face tremendous challenges in bringing our commitments and resources closer to balance. improving educational achievement, access to educational opportunity, and the level of public sophistication on economic issues are critical challenges with high returns to progress. this is why we will continue to invest in educational programs and why we are pleased to work closely with organizations as effective as the naf in this noble cause. 1 / 2 i take some comfort in the fact that, when naf students think of the federal reserve bank of new york, they know we have an important role in monetary policy and financial stability. they know we sit on a large amount of the gold and dollar reserves of the world. but what they think is really cool is the fed challenge, and how they can win a place in the national competition. my wife said to me this morning that the fed challenge sounds considerably more fun and exciting than the real thing. i applaud all of you who contribute to this effort. and i thank the naf for its tribute to the new york fed. 2 / 2