Thus, the surcharge attempts to reduce the chances of a G-SIB’s failure so as to bring the expected impact of failure of such a firm – that is, its expected damage to the system upon failure discounted by the possibility that it will, in fact, fail – more in line with that of other sizeable firms.
Moreover, the metrics for determining G-SIB status are heavily weighted toward the kind of interconnectedness features that pose macroprudential risks. This framework includes a range of surcharges in the 1.0–2.5 percent range for what will likely be a global group of about 30 banks, to be phased in as an expansion of the Basel III capital conservation buffer from 2016 to 2019.