EU adopts fair value derivatives accounting
The European Commission has brought in fair value accounting for derivatives, bringing the EU closer to full compliance with IAS 39 accounting standards.
The Commission has still to approve a replacement set of provisions for hedge accounting. Some European banks warned the IAS 39 rules would produce too much volatility in balance sheets and would mean costly changes to asset and liability management.
The original fair value accounting rules in IAS 39 raised protests from the European Central Bank and the Basel Committee on Banking Supervision. The rules also conflicted with a European law banning companies from using fair value methods on their own debt.
Although the rules are retroactive, most companies have already factored them in to their quarterly accounts, so major restatements are unlikely, the Commission said.
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