Supervisory guidance on the use of the fair value option by banks under International Financial Reporting Standards

This document is intended to provide supervisors with guidance on the prudential supervision of banks’ implementation of the fair value option under IAS 39 as amended on 16 June 2005. This guidance focuses on supervisors’ expectations for key policy positions and sound practices for banks that the Basel Committee on Banking Supervision believes will promote sound risk management and controls and maintain the integrity of regulatory capital measures. The guidelines and recommended practices presented here address: (a) sound risk management and control processes for banks that utilise the fair value option; and (b) the manner in which supervisors should consider the level and nature of banks’ use of the fair value option when assessing the adequacy of bank risk management and regulatory capital. In addition, the guidance also discusses supplemental information through supervisory reporting that will assist supervisors in understanding how banks are using the fair value option and its impact on their financial condition.
(Texto en inglés)