Regarding the first type, the ECG supports the current projects of IASB and FASB to improve impairment recognition for debt and equity instruments, including possibly replacing the 'incurred loss' model by an 'expected loss' model. But ECG does not support proposals to introduce into financial reporting intentional excessive conservatism that could undermine the ability of financial statements to give a true and fair view of financial position and financial performance for the period.

Regarding the buffer fund approach, ECG notes that while this may be something that bank regulators may wish to consider for prudential regulation purposes, incorporating this into financial reporting standards is wholly inappropriate. "Applying a mixture of financial and prudential accounting in the financial statements will damage the transparency, consistency and comparability of financial statements to the detriment of capital market users."

One of the issues that is being much debated at the moment is the relationship between general purpose financial reporting and prudential reporting. While there are links between the general purpose financial reporting and prudential reporting and there are advantages to be gained the closer general purpose financial statements and the prudential returns are to each other, the information needs of capital market participants are not the same as those of prudential regulators. Therefore, we think it is fundamentally important that it is recognised that those different information needs mean different financial reporting objectives, and that could mean different reporting.