The IIF has submitted a comment letter to the International Accounting Standards Board (IASB) Exposure Draft Interest Rate Benchmark Reform – Proposed amendments to IFRS 9 and IAS 39.
In the letter, the industry expresses its support to the IASB’s initiative as it tackles important accounting issues that may arise during the period leading up to the replacement of existing interest rate benchmarks (Phase 1 issues). The industry, however, invites the IASB to make clear or consider additional Phase 1 issues regarding the scope of application of the proposals, as well as specific requirements of hedge accounting.
The industry also recommends the IASB consider issues that might arise on or after transition (Phase 2 issues) to alternative references rates such as risk-free rates (RFRs). Those issues may arise sooner than expected so the IASB should start work on Phase 2 as soon as possible, in parallel to the finalization of the Phase 1. The industry also believes that early guidance is highly desirable as it would also contribute to facilitating the adoption of new RFRs.
Finally, the industry recommends IASB coordinate with Financial Accounting Standards Board (FASB) to provide consistent relief where relevant.