An EU regulators' committee in Brussels voted unanimously to accept Monday's emergency changes made by the International Accounting Standards Board. These will give banks more leeway in how they value certain assets whose prices have plunged. Lawmakers in the European Parliament soon endorsed the vote and member states gave their unanimous support. This means the changes, which are optional, can apply to calculations of banks' third quarter results if they wish.
Under the rule changes, banks and other financial institutions would be able to ”reclassify” certain financial instruments; effectively, they could move them from their trading books, where they must be marked at ”fair”, or current, market values, to their banking books.
In banking books, they can be reported at “amortised” cost, so financial institutions would not have to report further falls in market prices and gains would be spread evenly over the lifetime of the assets.