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European Union Ministers Call for Convergence with US on Accounting Standards

Following the move in the US to relax mark to market accounting rules, representatives from the European Union have called for greater convergence between Europe and the US in order to level the playing field. EU politicians including Italy’s Finance Minister Giulio Tremonti and French Finance Minister Christine Lagarde are concerned that the region’s banks may be put at a disadvantage if the same rules do not apply in all jurisdictions.

Accordingly, the politicians have charged the International Accounting Standards Board (IASB) to work with the US Financial Accounting Standards Board (FASB) on eradicating differences between the application of accounting rules. The proposals were tabled at a meeting in Prague this weekend and Tremonti commented: “If it was up to me to decide, I would just download the US text with Google and adopt it with a European blessing.”

Lagarde added: “We need to arrive at a level playing field on this matter. We need to stress to the IASB the urgency to examine accounting principles, in particular those concerning the valuation of illiquid assets.”

The FASB voted on the final amendments to mark to market standards last week and approved changes that give more leeway to financial institutions when valuing hard to value assets in illiquid markets. European Union representatives are keen for a Europe-wide decision be made soon in order to bring the region’s accounting rules in line with these changes.

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