Cross-currency flap leaves cloud over IFRS 9

Firms used to be able to throw anything they liked into the hypothetical derivative that is used to test cashflow hedge accounting, but standard-setters are embracing a purer approach. It has already caused a furore over cross-currency basis spreads, but the implications run much deeper. Lukas Becker reports

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At the end of 2012, Martin Friedhoff, an associate director at the International Accounting Standards Board (IASB) who focused on hedge accounting issues, switched jobs – moving to Ernst & Young and relocating to Auckland in New Zealand. It was probably a smart move to put some distance between himself and the world’s main financial centres, because one of his final acts prior to emigrating was to spearhead a controversial staff paper suggesting banks, corporates and other derivatives users had

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