Assessment criteria. First, the report puts forward ten criteria deemed important from the perspective of financial stability with which accounting standards should be consistent. The selected criteria are:

• reliance on principles-based accounting standards;
• use of reliable and relevant values;
• recognition of the allocation and magnitude of risks;
• provision of comparable financial statements;
• provision of clear and understandable financial statements;
• portrayal of the financial situation of banks (solvency, profitability, liquidity);
• alignment of accounting rules and sound risk management practices;
• promotion of a forward-looking recognition of risks;
• avoidance of negative and promotion of positive externalities, in particular regarding the behaviour of banks; and
• enhancement of market confidence and corporate governance.

Positive findings.The report analyses IFRSs based on these criteria. Positive features of the IFRSs from a financial stability point of view identified in the report include:

• the overall increase in comparability and transparency, which enhances the level playing field between financial institutions and strengthens market discipline;
• the provision of early warning signals on exposures or risks, which is relevant both for the risk management function of financial institutions and for effective market discipline; and
• the use of a principles-based framework, which provides for an adequate degree of flexibility in implementation.

Concerns.Then the report identifies areas where concerns could arise from a financial stability perspective. These include:

• the reliability of 'fair' values: fair values should be accurately measured and appropriately documented, so as to avoid an inappropriate upfront recognition of gains that are unrealisable and behaviour that is based on accounting figures rather than on the underlying economic factors;
• the economic basis for hedge accounting: the accounting framework should reflect the underlying economic situation and adequately take into account strictly documented risk management practices, as this would further encourage better risk management;
• provisioning: the provisioning regime should not be conducive to increasing pro-cyclicality, but should encourage the use of methods that are aimed at identifying credit losses already inherent in a particular credit portfolio at the present time.