Spreading fear

As credit spreads on financial institutions widened in the second half of 2008, some banks registered substantial gains on their own debt. The International Accounting Standards Board has subsequently ignited a debate over the inclusion of credit risk in liability measurement. Christopher Whittall reports

The financial crisis has laid bare many of the flaws, inconsistencies and anomalies in the regulatory framework. Supervisors have already been forced to make changes to Basel II, publishing new rules on trading book capital, liquidity risk and stress testing - with further guidelines on capital buffers, leverage ratios and pro-cyclicality in the offing. The accounting standards boards have not