EU calls for relaxation of accounting rules

News Article - 11 June 2009
Category: Business

Finance ministers in the EU have called for accounting rules in relation to assets valuation to be relaxed, owing to changes in the United States.

Under current rules banks and other financial institutions book assets in line with their current market worth, but with economic turbulence sweeping the United States and the rest of the world a large number of home loans have plummeted in value leading to substantial losses and threatening business health.

These deficits need to be accounted for, resulting in significant shortfalls.

Christine Lagarde, the French finance minister, told AFP: "American companies are now allowed to transfer their assets from their trading books, where they are valued at their market price, to their banking group (books) where they are kept to maturity."

Lagarde has called for similar revisions to be made in Europe to ensure that businesses can maintain a competitive edge over their counterparts in the United States.

The UK government has introduced a £500 billion bail-out for British banks in a bid to ease the existing economic turmoil.

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