The European Banking Federation (EBF) represents around 5,000 banks in Europe and is committed to promoting competitive and efficient banking practices while advocating for a single set of accounting standards. The document discusses the need for global convergence in financial reporting standards, particularly focusing on the IFRS and its adoption across different countries, including Japan and the US. It also highlights key issues in accounting for financial instruments, such as classifications, impairments, and hedge accounting, and calls for the development of more robust and forward-looking standards.

1. INTERNATIONAL IFRS ACADEMYSet up in 1960, the EBF is the voice of the European banking sector (European Union & European Free Trade Association countries)

2. It represents the interests of some 5000 European banks: large and small, wholesale and retail, local and cross-border financial institutions

3. It is committed to supporting EU policies to promote the single market in financial services in general and in banking activities in particular

4. It advocates free and fair competition in the EU and world markets and supports the banks' efforts to increase their efficiency and competitiveness.Tokyo, 28-29 July 2010A global approach to financial reporting and accounting for financial instrumentsRoger KaiserEuropean Banking Federation1

5. GLOBAL APPROACH TO FINANCIAL REPORTINGNeed for Cross-border Transparency of Financial StatementsTo enhance corporate performance’s comparability

6. To improve quality of financial reporting

7. To enhance investors’ protection

8. To increase the possibilities to raise capital

9. To create efficient, deep and liquid securities markets and enhance their international competitiveness

10. Need for adopting a single set of accounting standards for companies willing to raise capital …2

11. GLOBAL APPROACH TO FINANCIAL REPORTINGKey Players in Accounting Standard-Setting3INTERNATIONALe.a. EUNATIONALUSIAS / IFRSLocal GAAPe.g. J-GAAPUS-GAAPACCOUNTINGSTANDARDSN’al Std-Setter(NSS)e.g. ASBJIASBFASBSTANDARD-SETTERSECJFSASECREGULATORS

12. GLOBAL APPROACH TO FINANCIAL REPORTING US Convergence Strategy4INTERNATIONALe.a. EUNATIONALUSIAS / IFRSLocal GAAPe.g. J-GAAPUS-GAAPACCOUNTINGSTANDARDSN’al Std-Setter(NSS)e.g. ASBJIASBFASBSTANDARD-SETTERSECSECJFSAREGULATORSConvergence on Accounting Standards

13. GLOBAL APPROACH TO FINANCIAL REPORTING US Mutual Recognition Strategy5INTERNATIONALe.a. EUNATIONALUSIAS / IFRSLocal GAAPe.g. J-GAAPUS-GAAPACCOUNTINGSTANDARDSN’al Std-Setter(NSS)e.g. ASBJIASBFASBSTANDARD-SETTERSECSECJFSAREGULATORSMutual Recognition on Accounting Standards

14. GLOBAL APPROACH TO FINANCIAL REPORTINGEU Strategy Towards a Single Set of Accounting RulesModernisation DirectiveIAS RegulationFair Value DirectiveEC Communication“EU Financial reporting strategy: the way forward”Lisbon European Council4th and 7th AccountingDirectivesMarch 2000June 2000July 200220031978-1983Sept. 20016

15. GLOBAL APPROACH TO FINANCIAL REPORTING EU Strategy : IAS Regulation & Modernisation Directive Regulation (EC) No 1606/2002unlisted companieslisted companiesindividual accountsconsolidated accountsindividual accountsconsolidated accountsIAS/IFRS permitted (optionality for member states)IAS/IFRSrequiredDirective 2003/51/EC: Modernization & updating of accounting rules7

16. GLOBAL APPROACH TO FINANCIAL REPORTING EU Strategy: Endorsement process for IFRSSARGEFRAGtechnical levelARCpolitical levelEUROPEAN COMMISSIONRegulationsEUROPEAN PARLIAMENTIASBIFRICEndorsementprocedureMEMBER STATEStranspositionMonitoringBoard8

17. 9GLOBAL APPROACH TO FINANCIAL REPORTING Japan’s Strategy: Convergence Process(Oct ‘02) Norwalk Agreement of IASB-FASBEU’s Actions  Japan’s ActionsAdoption of EU Directives  (‘03, ‘04)(Jan ‘05)  ASBJ – IASB launched joint program for convergenceCESR Advice  (Jul ‘05)(Jul ‘06)  BAC(*) report “Towards International Convergence of Accounting Standards”(Oct ‘06) ASBJ published the project planEstablishment of Japan-EU Monitoring  (Nov ‘06)Meeting(Aug ‘07)  Tokyo Agreement(Dec ‘07)  ASBJ published the revised project plan based on the Tokyo AgreementDecision on Equivalence of Japanese (Dec ‘08)GAAP with IFRSs(*) BAC (Business Accounting Council) is an advisory body on accounting matters to the JFSATokyo Agreement  ASBJ agreed with IASB to accelerate convergence between J-GAAP and IFRSsEliminate the major differences or provide compatible accounting standards for the items which CESR advised in 2005, by 2008

18. Set a target date of 30 June 2011 for resolving other issues

19. Enhance cooperation to facilitate Japan’s greater contribution to the international standard-setting processSource: JFSA

20. 10GLOBAL APPROACH TO FINANCIAL REPORTING Japan’s Strategy: Roadmap for IFRS ApplicationVoluntary ApplicationMinimum 3 yearsScope: Certain listed companies whose financial or business activities are conducted internationallyApplied to: Consolidated Financial StatementsFrom: Fiscal year ending 31 March 2010Decision on Mandatory ApplicationPossible Start of Mandatory ApplicationAround 2012: Decision regarding mandatory application of IFRSs

21. Preparation period: Minimum 3 years