Italy Suspends Mark-To-Market Accounting on Government Bonds

September 8, 2010 by · Leave a Comment
Filed under: General, Gocernment Bonds 

The Bank of Italy has announced that Italian lenders holding European government bonds in their available-for-sale portfolio no longer need to take into account possible capital gains or losses.
“Count Bank of Italy’s decision to allow banks holding European government bonds in AFS portfolios to suspend mark-to-market accounting rules as the latest iteration of unintended consequences,” said Jeffrey Rosenberg, head of global credit strategy research for Bank of America Merrill Lynch. “By suspending the rules, inadvertently market uncertainty increases as confidence over the value of the holdings, exposures and hence capitalization erodes.”
Italy’s decision aligns with those of European nations such as France and Germany that have already suspended fair value accounting requirements.