ECB Opposes Fair Value Accounting

August 25, 2010 by · Leave a Comment
Filed under: EBC, Fair Value Accounting, General 

Speaking at a conference in Paris, European Central Bank Executive Board member Gertrude Tumpel-Gugerell said that the U.S.-led move towards fully valuing assets at their current market value is in many ways misguided.
In her comments, she also stressed that policymakers should give greater mind to financial stability when designing new accounting standards. She also mentioned that she was not optimistic that America and international accounting standards could be blended into one worldwide standard by mid-2011.
In the notes of her speech given in Paris, Tumpel-Gugerell said “The ECB strongly opposes a full fair value approach … The potential impact of fair value accounting on behavior, asset price dynamics and subsequently on financial stability should not be underestimated.”
Fair value accounting was also problematic in illiquid markets, she argued. “What is the use of marking to market when there is no market?”
This is from Europeans! Aren’t they smarter than we are on everything? “…the potential impact of fair value accounting on behavior.” That says it all. Be careful what you wish for.