World Accounting Report

Review of the IFRS 9 impairment model

Has the ECL model delivered?

IFRS 9, Financial Instruments, included a radical new model for providing for losses on financial assets. The expected credit losses (ECL) model introduced a forward-looking way of recognising future losses on loans and was the IASB's answer to criticisms of the incurred loss model in the predecessor standard, which had resulted in banks' write-off of loans being characterised as "too little, too late". The board is now in the process of assessing whether the model has delivered the anticipated benefits.

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