Bank of England official Martin Taylor urged his colleagues to change the way International Financial Reporting Standards are implemented, to avoid damage to crisis-hit banks.
The latest IFRS 9 standards are intended to make banks’ provision for losses, something the BoE supports, but in some circumstances that may cause problems, said Taylor. A bank that foresees losses too late or comes under too much pressure from its auditors could overestimate provisions “in the depths of a crisis”.
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