Loan loss dynamics


When leaders of the Group of 20 countries met in London at the start of April, one of their chief concerns was pro-cyclicality – an array of forces that served to magnify the severity of the financial crisis. They arrived at the meeting armed with a report from the Financial Stability Board (FSB) blaming loan-loss accounting for part of the problem and calling for new standards to recognise losses earlier and thereby dampen down future crises. The G-20 endorsed that call, and after seven months

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