That seems to undermine efforts to harmonise the regulation of banks. One
such area where agreement appears to be lacking is international accounting
standards. This is the only area of financial regulation
where there is already an established international body setting the principles
governing accounting. And for very good reason. It enables comparisons and
therefore the movement of capital across borders.
But not everyone is behind international standards, despite proclamations
that they should be speaking as one. Indeed, the US has gone cold on
international standards and regulators in the UK believe its plan to adopt them
by 2014 is no longer possible. The protectionist agenda is coming to the fore.
But this would be a mistake. Without a set of international standards, and an
international standard setter, there seems little hope of formulating an
agreement between nations on accounting for banks, and possibly a longer-term
reform of regulating them.
Changing the accounting of course, may not be the answer to making banks more
stable. But if that’s the way some people want to go, it needs all states to
agree the same principles, through a body like the International Accounting
Standards Board. Put the banks aside and international standards are still
essential for global trade. G20 must stand up for international standards and
the US must buy in or risk damaging the world economy further.
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