Commissioner McCreevy discusses the 'credit crunch'

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04 Jul 2008

EU Commissioner for Internal Markets and Services Charlie McCreevy spoke about The Financial Turmoil – The Role of the EU-Commission at a meeting of the The Centre for European Policy Studies in Brussels.

Among other things, he discussed the IASB's current efforts to address the valuation of illiquid financial assets. He said that the solution lies in improved valuation techniques and not in disregarding fair value changes entirely. An excerpt:

There have been calls to temporarily disregard fair value accounting in order to neutralise possible pro-cyclical effects and avoid having to write-down assets. Intervention right now risks adding to the confusion and create even greater distrust in companies' accounts. What is needed is additional guidance on the valuation of complex and illiquid financial instruments. This has also been underscored in a report published by the Committee of European Banking Supervisors (CEBS) last month. It highlighted a number of accounting issues that may require further attention of accounting standards setters in order to improve consistency, comparability and transparency of valuation practices.

Click to view The Financial Turmoil – The Role of the EU-Commission (PDF 75k).
Here's a link to our Credit Crunch Page.

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