This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

Report on the financial stability implications of IFRS 9

  • Document (mid gray) Image

27 Jul 2017

The European Systemic Risk Board (ESRB) has published a report on the financial stability implications of IFRS 9 'Financial Instruments'. The ESRB’s work on this topic was requested by the European Parliament in January 2016.

The analysis in Financial stability implications of IFRS 9 focuses on two aspects:

  • IFRS 9 and fair value accounting for the measurement of financial assets
  • The new expected credit loss paradigm

The report notes:

The ESRB concludes that IFRS 9 represents a major improvement in comparison with IAS 39 and is expected to bring substantial benefits from a financial stability perspective. Together with the greater clarity and certainty associated with its principles-based approach to the classification and measurement of financial instruments, the earlier and fuller recognition of impairment losses under the new expected credit losses model is expected to have positive effects on financial stability.

The ESRB report is accompanied by an occasional paper Assessing the cyclical implications of IFRS 9 – a recursive model. This paper describes a model for assessing different approaches to the accounting of credit impairment losses. In particular, it compares the impact of a crisis on banks assuming four such different approaches, including the current approach in IAS 39 (incurred losses) and the solutions adopted under IFRS 9 and in the United States respectively.

Please click for the two reports on the ESRB website:

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.