BCBS issues guidance on the use of the fair value option for financial instruments
The Basel Committee on Banking Supervision (BCBS) has released supervisory guidance on the use of the fair-value option for financial instruments by banks. The principles-based guidance is structured by seven principles that are classed as either supervisory expectations relevant to the use of the fair-value option or the supervisory evaluation of risk management, controls and capital adequacy. The guidance does not set forth additional accounting requirements.
The guidance refers specifically to International Accountancy Standard (IAS) 39, “Financial instruments: recognition and measurement”, though the BCBS acknowledges that principles set forth in this guidance can apply to other accounting regimes. The BCBS states that national supervisors will need to refer to the definition of the fair-value option in their jurisdiction to decide if the principles
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