The use of fair-value accounting should depend on the business model of companies and should not be applied indiscriminately, a European Central Bank executive board member, Gertrude Tumpel-Gugerell, said Tuesday.
"The ECB is of the opinion that fair-value measurement should only be required if it is consistent with the institution's business model and the characteristics of the particular underlying asset or liability," she said in remarks prepared for a conference in Paris.
Fair-value accounting, a key part of International Financial Reporting Standards, came under fire during the global financial crisis for worsening losses on banks' balance sheets by forcing them to account for certain assets at market prices when markets were disrupted.
