Fair Value Accounting and Procyclicality: Mitigating Regulatory andudAccounting Policy Differences through Regulatory Structure Reforms andudEnforced Self Regulation.

摘要

In what ways can changes to the structure of regulation (as well as other regulatory reforms)udmitigate the effects of policies which trigger financial instability? More specifically policies,udinformation asymmetries or externalities which could give rise to bank contagion,udsystemic/liquidity risks or procyclical effects?udWhilst acknowledging that accounting standards play a fundamental role in addressing problemsudwhich could contribute to information asymmetries and ultimately systemic risks, this paper alsoudhighlights why the type of regulatory structure, clear allocation of responsibilities betweenudregulators, as well as measures aimed at fostering accountability, constitute vital elements whichudcould serve as safeguards in mitigating procyclical effects (as well as other factors) which couldudtrigger financial instability. In achieving this aim, the paper focusses on the rationale for fair valueudaccounting, as well as problematic issues arising from its implementation.udThe adoption of international accounting standards is considered to have a vital role in contributingudto financial stability. This paper will also illustrate how the implementation of accounting standardsudand policies, in certain instances, have contrasted with Basel Committee initiatives aimed atudmitigating procyclicality and facilitating forward looking provisioning. More importantly, the paperudwill highlight how and why differences between regulatory and accounting policies could (andudshould) be mitigated.