Accounting Changes for Banks

Banks hail new decision from the Financial Accounting Standards Board

This morning the U.S. Financial Accounting Standards Board created some new rules that may help banks as they struggle with their balance sheets. The Financial Times reports on the new rules:

The Financial Accounting Standards Board voted on Thursday morning to allow banks more freedom to use their own valuation models, rather than current market prices, for assets where markets have become illiquid. A second rule change means banks will only have to recognise a part of any impairment in their profits.

This move emphasizes the fact that perception has a great deal to do with how investments fare. Clearly, being able to change the perception of the value of their assets will help banks. It is important to remember that, whether dealing with stocks or currencies, perception plays a big role in market performance.