IIF Authors

Status: Will be live at 01/31/2017 00:00

Response to BCBS on Regulatory Treatment of Accounting Provisions

Tuesday, January 31, 2017

The IIF and the GFMA comment on the following BCBS documents:

The Discussion Paper on regulatory treatment of accounting provisions

The IIF and GFMA point out some of the prominent issues that need to be addressed to avoid new accounting provisions giving way to excessive and volatile capital requirements for credit risk. Regarding the long-term approach, the IIF and the GFMA consider at this stage that a range of different options should be considered but favor an approach that would in some manner recognize in CET1 capital the excess of new provisions.

The Consultative Document on regulatory treatment of accounting provisions - interim approach and transitional arrangements

The IIF and the GFMA set out the reasons that warrant transitional arrangements and urge the Committee to consider approaches that would neutralize the impact of new provisions on CET1 capital, at least until the longer-term treatment is determined. Otherwise, an interim period of at least five years would be necessary and, for simplicity purposes, linear amortization over time should be promoted.