Financial Stability Review
Regulatory Structure Articles
2004
2005 2004 2003 2002 2001 2000 1999 1998 1997
Financial
Instrument Accounting speech
(58k)
(Issue 17, December 2004)
This is the text of a speech delivered by Sir Andrew Large, the Bank of England’s Deputy Governor for Financial Stability, to the thirteenth City of London Central Banking Conference on 22 November 2004. He emphasises the part which well-designed accounting standards can play in maintaining financial stability. He also notes the differences of view on IAS 39 (a standard dealing with financial instruments), which persist despite the efforts of the International Accounting Standards Board to achieve consensus, and suggests that in looking longer term towards a revision of IAS 39 it might be helpful to take a pace or two back and seek a shared understanding on a number of fundamental issues. These include the question of who and what accounts are for, whether, and if so how, fair value measures can be accommodated alongside historic cost measures and the implications of a wider application of fair values for the volatility of accounting results.
Banking
Stability and Transparency
(163k)
(Issue 17, December 2004)
A number of recent policy initiatives have called for enhanced transparency of banking firms. While the hope is that enhanced transparency may improve incentives ex ante, it is less clear whether transparency is necessarily a good thing ex post, when a bank might have hit hard times and provision of information could have a destabilising effect. This article provides a synopsis of these different effects and also provides some new evidence in an attempt to clarify empirically whether in the long run, taking ex ante and ex post effects together, transparency is likely to reduce or increase bank stability. The analysis suggests that, on balance, transparency reduces the chance of severe banking problems and thus enhances overall financial stability.
Accounting
and Financial Stability
(104k)
(Issue 16, June 2004)
Accounting standards and the auditing of accounts influence financial stability in a number of ways. High quality accounts make an important contribution to transparency, market discipline and risk management. Interest in the impact of accounting has grown for a number of reasons, including the EU decision to require use of international accounting standards for the group accounts of companies listed in the EU from 2005.
Key Resources
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Memorandum of Understanding between HM Treasury,
the Bank of England and the Financial Services Authority
Download PDF (50k) |
