IASB Finalises Macro Hedging Amendments to IAS 39

The International Accounting Standards Board (IASB) has issued an Amendment to IAS 39 Financial Instruments: Recognition and Measurement on Fair Value Hedge Accounting for a Portfolio Hedge of Interest Rate Risk. The amendments are intended to simplify the implementation of IAS 39 by enabling fair value hedge accounting to be used more readily for a portfolio hedge of interest rate risk than under previous versions of IAS 39. The revision is a response to concerns expressed by the banking community about the potential difficulty of implementing the requirements of IAS 39. The publication of this amendment means that macro hedging will be part of the IASB’s set of standards to be adopted in 2005. The IASB noted that discussions will continue on another aspect of IAS 39, namely an additional hedging methodology and the balance sheet presentation of certain hedges. However, it is unlikey that the amendments will satisfy the European banking community. A spokesman for Frits Bolkestein, the European Commissioner responsible for accounting, said: ‘We will have great difficulty in approving the standards unless European banks and insurers are satisfied that their concerns have been met.’

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