Sketching progress that has been achieved in the regulatory field after the global financial crisis, Mr Hoogervorst first pointed at the increased use of IFRSs around the world. This, he stated, has brought "tremendous benefits to the global economy in terms of transparency, accountability and efficiency". In terms of standard-setting he then mentioned the completion of IFRS 15 and IFRS 16 and the near completion of the new standard on insurance contracts. The completion of IFRS 9 he called the IASB's main response to the financial crisis.
Looking more deeply into IFRS 9 Financial Instruments, Mr Hoogervorst explained the new expected loss model that means that full lifetime losses will have to be recognised as soon as a significant increase in credit risk has taken place. He noted that implementation of the expected loss model will require considerable effort, particularly in jurisdictions where the banking system is suspected of harbouring a lot of problem loans. In these jurisdictions proper implementation of IFRS 9 could be a huge challenge for auditors, market and prudential regulators. He warned and encouraged his audience:
Expect to hear a lot of complaints, but stand resolute in your determination to do the right thing!
After discussing accounting, Mr Hoogervorst strayed beyond the remit of the IASB and offered his thoughts on audit, bank capital, leverage in the global economy, and unchartered waters in general.
Please click to access the full text of Mr Hoogervorst's speech on the IASB website.