The International Accounting Standards Board (IASB) has proposed a Risk Mitigation Accounting model to reflect how financial institutions manage interest rate risk within their portfolios.
This proposed new model responds to feedback that the current hedge accounting requirements do not reflect how interest rate risk is managed. It aims to improve transparency on how interest rate risk management affects financial performance and future cash flows.
To implement the new model, the IASB is proposing amendments to IFRS 9 (Financial Instruments) and IFRS 7 (Financial Instruments: Disclosures”. It is also proposing to withdraw IAS 39 (Financial Instruments: Recognition and Measurement).
IASB chair Andreas Barckow explained: “Our proposed Risk Mitigation Accounting model aims to bring accounting and risk management closer together to enhance internal efficiency and strengthen communication between financial institutions and their stakeholders.”
A public consultation on the IASB’s proposed Risk Mitigation Accounting model is open until 31 July 2026.
Companies:IASB
People:Andreas Barckow
