Page 17 of 23  ing the buffer early in the financial cycle are relatively low compared with the costs, for society as well as the individual institution, of not having sufficient capital in crisis periods. A higher buffer increases resilience in the financial system. Effects on banks' lending rates and lending to customers are expected to be limited.
Higher capital requirements imply that a larger share of assets must be funded using equity rather than debt. A common argument is that equity is a more expensive source of funding than debt. However, this is not necessarily the case as the risk decreases for both shareholders and creditors when a bank's equity increases.