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Fair value accounting and financial stability: challenges and dynamics

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  • Matherat, S.

Abstract

Fair value accounting has played a specific role in the current crisis. Its application raises a number of different issues; while some are currently being addressed by the relevant standard setters, others have a more macroeconomic dimension. As regards the immediate drawbacks of the fair value approach, both standard setters and banking supervisors are working on guidance on how to value financial instruments in times of stress and the appropriate internal processes that should be in place in financial institutions to achieve this. However, the crisis has also highlighted some more macro-financial issues. In this respect, central banks, thanks to the overview they have of the fi nancial system and their central role in money markets, seem well-positioned to be the guardians of fi nancial stability. In order to play this role, cooperation must be enhanced between central banks, standard setters and supervisors.

Suggested Citation

  • Matherat, S., 2008. "Fair value accounting and financial stability: challenges and dynamics," Financial Stability Review, Banque de France, issue 12, pages 53-63, October.
    • Handle: RePEc:bfr:fisrev:2008:12:6
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    Cited by:

    1. Marco Venuti, 2012. "The proposal for updating the EU Accounting Directives: The adequacy of the proposal versus the legislative targets," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2012(4), pages 65-85.
    2. Daniel Mügge & Bart Stellinga, 2015. "The unstable core of global finance: Contingent valuation and governance of international accounting standards," Regulation & Governance, John Wiley & Sons, vol. 9(1), pages 47-62, March.
    3. Habib-ur Rahman & Muhammad Waqas Yousaf & Nageena Tabassum, 2020. "Bank-Specific and Macroeconomic Determinants of Profitability: A Revisit of Pakistani Banking Sector under Dynamic Panel Data Approach," IJFS, MDPI, vol. 8(3), pages 1-19, July.
    4. Peter Fiechter & Zoltán Novotny-Farkas, 2017. "The impact of the institutional environment on the value relevance of fair values," Review of Accounting Studies, Springer, vol. 22(1), pages 392-429, March.
    5. Sigrid Quack & Paul Lagneau-Ymonet, 2012. "What's the Problem ? Competing Diagnosis and Shifting Coalitions in the Reform of International Accounting Standards," Post-Print hal-01520519, HAL.
    6. Roberts, John & Wang, Timothy, 2019. "Faithful representation as an ‘objective mirage’: A Saussurean analysis of accounting and its participation in the financial crisis," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 65(C).

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