Applying IFRS 9 to Central Banks Foreign Reserves

Effective January 1, 2018, IFRS 9 Financial Instruments will replace IAS 39 Financial Instruments: Recognition and Measurement (IAS 39). Unlike most publications on IFRS 9, this paper focuses primarily on the application of the new standard on cent...

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Main Author:	World Bank
Format:	Report
Language:	English en_US
Published:	World Bank, Washington, DC 2016
Subjects:	HOLDING BORROWER INTEREST INCOME ACCOUNTING DEFAULTS VALUATION FUTURES INTEREST REGULATORY STANDARDS INTEREST RATE OPTION EXCHANGE DISCOUNT RATE LIQUIDITY CREDIT RATING AGENCIES PORTFOLIO LIQUIDITY RISK FINANCIAL STATEMENTS MARKET INSTRUMENTS CAPACITY BUILDING FINANCIAL STATEMENT DISCOUNT CREDITWORTHINESS ASSET BASE PROBABILITY OF DEFAULT ASSET MANAGEMENT ASSET VALUES RESERVE CENTRAL BANKS PREPAYMENT CASH FLOWS INSTRUMENTS LENDER CREDIBILITY BUDGET CENTRAL BANK MATURITY EXTERNAL FINANCE INTERNATIONAL COURT DERIVATIVES CREDIT RATINGS CURRENCY ASSET PORTFOLIOS DOMESTIC CURRENCY NATURAL DISASTER LEVEL OF CONFIDENCE RESERVE BANK TRANCHES PORTFOLIOS FINANCES FOREIGN CURRENCIES TRADING EXTERNAL ASSETS CREDIT RISKS MONETARY FUND MARKETS DEBT RETURN RESERVES ASSET CLASSES FINANCIAL SYSTEM FINANCE ASSET CLASSIFICATION FOREIGN CURRENCY PROFIT MARGIN TRANSACTIONS INVESTMENT GUIDELINES CREDIT LOSSES EQUITY SOVEREIGN RATINGS DEBT PAYMENTS CREDIT RISK ASSETS SOVEREIGN DEBT FOREIGN EXCHANGE RESERVES CREDIT LOSS ASSET VALUE GOOD TRANSPARENCY FINANCIAL STABILITY TRANCHE MARKET DATA FUTURE RETURNS EQUITY INVESTMENTS FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENT WORKING CAPITAL FAIR VALUE FINANCIAL ASSET FINANCIAL SERVICE PROVIDERS SHARES BALANCE SHEET MARKET DEFAULT CREDIT RATING FOREIGN EXCHANGE MARKET RISK DEFAULT PROBABILITIES INVESTMENT POLICY RISK OF DEFAULT ASSET CLASSIFICATIONS ACCOUNTING STANDARD FOREIGN EXCHANGE RESERVE FINANCIAL INFRASTRUCTURE CREDIT RISK HOLDINGS BANK PORTFOLIO CURRENCIES EQUITY INSTRUMENTS ACCOUNTING STANDARDS DEBT INSTRUMENTS NATIONAL BANK INVESTMENT BALANCE SHEETS CREDIT QUALITY DEBT OBLIGATIONS FINANCIAL ASSETS MONEY MARKET FUTURE CREDIT EXTERNAL DEBT PROFIT MONEY MARKET INSTRUMENTS INVESTMENTS RISK MANAGEMENT LENDING FINANCIAL RISK ASSET CLASS EXCHANGE RATE INSTRUMENT PROFITS LIABILITIES COMMODITY PRICES HEDGE SHORT-TERM LIQUIDITY INTERNATIONAL SETTLEMENTS CASH FLOW PORTFOLIO MANAGEMENT INVESTING
Online Access:	http://documents.worldbank.org/curated/en/2016/01/25810853/applying-ifrs-9-central-banks-foreign-reserves http://hdl.handle.net/10986/23770

id	okr-10986-23770
recordtype	oai_dc
spelling	okr-10986-237702021-05-25T10:54:40Z Applying IFRS 9 to Central Banks Foreign Reserves World Bank HOLDING BORROWER INTEREST INCOME ACCOUNTING DEFAULTS VALUATION FUTURES INTEREST REGULATORY STANDARDS INTEREST RATE OPTION EXCHANGE DISCOUNT RATE LIQUIDITY CREDIT RATING AGENCIES PORTFOLIO LIQUIDITY RISK FINANCIAL STATEMENTS MARKET INSTRUMENTS CAPACITY BUILDING FINANCIAL STATEMENT DISCOUNT CREDITWORTHINESS ASSET BASE PROBABILITY OF DEFAULT ASSET MANAGEMENT ASSET VALUES RESERVE CENTRAL BANKS PREPAYMENT CASH FLOWS INSTRUMENTS LENDER CREDIBILITY BUDGET CENTRAL BANK MATURITY EXTERNAL FINANCE INTERNATIONAL COURT DERIVATIVES CREDIT RATINGS CURRENCY ASSET PORTFOLIOS DOMESTIC CURRENCY NATURAL DISASTER LEVEL OF CONFIDENCE RESERVE BANK TRANCHES PORTFOLIOS FINANCES FOREIGN CURRENCIES TRADING EXTERNAL ASSETS CREDIT RISKS MONETARY FUND MARKETS DEBT RETURN RESERVES ASSET CLASSES FINANCIAL SYSTEM FINANCE ASSET CLASSIFICATION FOREIGN CURRENCY PROFIT MARGIN TRANSACTIONS INVESTMENT GUIDELINES CREDIT LOSSES EQUITY SOVEREIGN RATINGS DEBT PAYMENTS CREDIT RISK ASSETS SOVEREIGN DEBT FOREIGN EXCHANGE RESERVES CREDIT LOSS ASSET VALUE GOOD TRANSPARENCY FINANCIAL STABILITY TRANCHE MARKET DATA FUTURE RETURNS EQUITY INVESTMENTS FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENT WORKING CAPITAL FAIR VALUE FINANCIAL ASSET FINANCIAL SERVICE PROVIDERS SHARES BALANCE SHEET MARKET DEFAULT CREDIT RATING FOREIGN EXCHANGE MARKET RISK DEFAULT PROBABILITIES INVESTMENT POLICY RISK OF DEFAULT ASSET CLASSIFICATIONS ACCOUNTING STANDARD FOREIGN EXCHANGE RESERVE FINANCIAL INFRASTRUCTURE CREDIT RISK HOLDINGS BANK PORTFOLIO CURRENCIES EQUITY INSTRUMENTS ACCOUNTING STANDARDS DEBT INSTRUMENTS NATIONAL BANK INVESTMENT BALANCE SHEETS CREDIT QUALITY DEBT OBLIGATIONS FINANCIAL ASSETS MONEY MARKET FUTURE CREDIT EXTERNAL DEBT PROFIT MONEY MARKET INSTRUMENTS INVESTMENTS RISK MANAGEMENT LENDING FINANCIAL RISK ASSET CLASS EXCHANGE RATE INSTRUMENT PROFITS LIABILITIES COMMODITY PRICES HEDGE SHORT-TERM LIQUIDITY INTERNATIONAL SETTLEMENTS CASH FLOW PORTFOLIO MANAGEMENT INVESTING Effective January 1, 2018, IFRS 9 Financial Instruments will replace IAS 39 Financial Instruments: Recognition and Measurement (IAS 39). Unlike most publications on IFRS 9, this paper focuses primarily on the application of the new standard on central banks’ foreign reserve assets, which increasingly constitute a substantial part of central banks’ balance sheet. Based on IFRS 9 implementation assessment projects with several central banks, the World Bank RAMP accounting team identified six factors that can help central banks determine appropriate business model for foreign reserve assets. Empirically, the result of applying the six factors has indicated that central banks’ reserve portfolios often display elements of more than one business model; hence management judgment coupled with a well-articulated accounting policy paper will be critical when implementing IFRS 9. Under most central banks reserves management frameworks, performing the solely payments of principal and interest (SPPI) test should be a relatively straightforward exercise, and the practical expedient option under the new impairment provisions should also apply. 2016-02-26T15:41:01Z 2016-02-26T15:41:01Z 2016-01-20 Report http://documents.worldbank.org/curated/en/2016/01/25810853/applying-ifrs-9-central-banks-foreign-reserves http://hdl.handle.net/10986/23770 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Economic & Sector Work :: Other Financial Accountability Study Economic & Sector Work
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	HOLDING BORROWER INTEREST INCOME ACCOUNTING DEFAULTS VALUATION FUTURES INTEREST REGULATORY STANDARDS INTEREST RATE OPTION EXCHANGE DISCOUNT RATE LIQUIDITY CREDIT RATING AGENCIES PORTFOLIO LIQUIDITY RISK FINANCIAL STATEMENTS MARKET INSTRUMENTS CAPACITY BUILDING FINANCIAL STATEMENT DISCOUNT CREDITWORTHINESS ASSET BASE PROBABILITY OF DEFAULT ASSET MANAGEMENT ASSET VALUES RESERVE CENTRAL BANKS PREPAYMENT CASH FLOWS INSTRUMENTS LENDER CREDIBILITY BUDGET CENTRAL BANK MATURITY EXTERNAL FINANCE INTERNATIONAL COURT DERIVATIVES CREDIT RATINGS CURRENCY ASSET PORTFOLIOS DOMESTIC CURRENCY NATURAL DISASTER LEVEL OF CONFIDENCE RESERVE BANK TRANCHES PORTFOLIOS FINANCES FOREIGN CURRENCIES TRADING EXTERNAL ASSETS CREDIT RISKS MONETARY FUND MARKETS DEBT RETURN RESERVES ASSET CLASSES FINANCIAL SYSTEM FINANCE ASSET CLASSIFICATION FOREIGN CURRENCY PROFIT MARGIN TRANSACTIONS INVESTMENT GUIDELINES CREDIT LOSSES EQUITY SOVEREIGN RATINGS DEBT PAYMENTS CREDIT RISK ASSETS SOVEREIGN DEBT FOREIGN EXCHANGE RESERVES CREDIT LOSS ASSET VALUE GOOD TRANSPARENCY FINANCIAL STABILITY TRANCHE MARKET DATA FUTURE RETURNS EQUITY INVESTMENTS FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENT WORKING CAPITAL FAIR VALUE FINANCIAL ASSET FINANCIAL SERVICE PROVIDERS SHARES BALANCE SHEET MARKET DEFAULT CREDIT RATING FOREIGN EXCHANGE MARKET RISK DEFAULT PROBABILITIES INVESTMENT POLICY RISK OF DEFAULT ASSET CLASSIFICATIONS ACCOUNTING STANDARD FOREIGN EXCHANGE RESERVE FINANCIAL INFRASTRUCTURE CREDIT RISK HOLDINGS BANK PORTFOLIO CURRENCIES EQUITY INSTRUMENTS ACCOUNTING STANDARDS DEBT INSTRUMENTS NATIONAL BANK INVESTMENT BALANCE SHEETS CREDIT QUALITY DEBT OBLIGATIONS FINANCIAL ASSETS MONEY MARKET FUTURE CREDIT EXTERNAL DEBT PROFIT MONEY MARKET INSTRUMENTS INVESTMENTS RISK MANAGEMENT LENDING FINANCIAL RISK ASSET CLASS EXCHANGE RATE INSTRUMENT PROFITS LIABILITIES COMMODITY PRICES HEDGE SHORT-TERM LIQUIDITY INTERNATIONAL SETTLEMENTS CASH FLOW PORTFOLIO MANAGEMENT INVESTING
spellingShingle	HOLDING BORROWER INTEREST INCOME ACCOUNTING DEFAULTS VALUATION FUTURES INTEREST REGULATORY STANDARDS INTEREST RATE OPTION EXCHANGE DISCOUNT RATE LIQUIDITY CREDIT RATING AGENCIES PORTFOLIO LIQUIDITY RISK FINANCIAL STATEMENTS MARKET INSTRUMENTS CAPACITY BUILDING FINANCIAL STATEMENT DISCOUNT CREDITWORTHINESS ASSET BASE PROBABILITY OF DEFAULT ASSET MANAGEMENT ASSET VALUES RESERVE CENTRAL BANKS PREPAYMENT CASH FLOWS INSTRUMENTS LENDER CREDIBILITY BUDGET CENTRAL BANK MATURITY EXTERNAL FINANCE INTERNATIONAL COURT DERIVATIVES CREDIT RATINGS CURRENCY ASSET PORTFOLIOS DOMESTIC CURRENCY NATURAL DISASTER LEVEL OF CONFIDENCE RESERVE BANK TRANCHES PORTFOLIOS FINANCES FOREIGN CURRENCIES TRADING EXTERNAL ASSETS CREDIT RISKS MONETARY FUND MARKETS DEBT RETURN RESERVES ASSET CLASSES FINANCIAL SYSTEM FINANCE ASSET CLASSIFICATION FOREIGN CURRENCY PROFIT MARGIN TRANSACTIONS INVESTMENT GUIDELINES CREDIT LOSSES EQUITY SOVEREIGN RATINGS DEBT PAYMENTS CREDIT RISK ASSETS SOVEREIGN DEBT FOREIGN EXCHANGE RESERVES CREDIT LOSS ASSET VALUE GOOD TRANSPARENCY FINANCIAL STABILITY TRANCHE MARKET DATA FUTURE RETURNS EQUITY INVESTMENTS FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENT WORKING CAPITAL FAIR VALUE FINANCIAL ASSET FINANCIAL SERVICE PROVIDERS SHARES BALANCE SHEET MARKET DEFAULT CREDIT RATING FOREIGN EXCHANGE MARKET RISK DEFAULT PROBABILITIES INVESTMENT POLICY RISK OF DEFAULT ASSET CLASSIFICATIONS ACCOUNTING STANDARD FOREIGN EXCHANGE RESERVE FINANCIAL INFRASTRUCTURE CREDIT RISK HOLDINGS BANK PORTFOLIO CURRENCIES EQUITY INSTRUMENTS ACCOUNTING STANDARDS DEBT INSTRUMENTS NATIONAL BANK INVESTMENT BALANCE SHEETS CREDIT QUALITY DEBT OBLIGATIONS FINANCIAL ASSETS MONEY MARKET FUTURE CREDIT EXTERNAL DEBT PROFIT MONEY MARKET INSTRUMENTS INVESTMENTS RISK MANAGEMENT LENDING FINANCIAL RISK ASSET CLASS EXCHANGE RATE INSTRUMENT PROFITS LIABILITIES COMMODITY PRICES HEDGE SHORT-TERM LIQUIDITY INTERNATIONAL SETTLEMENTS CASH FLOW PORTFOLIO MANAGEMENT INVESTING World Bank Applying IFRS 9 to Central Banks Foreign Reserves
description	Effective January 1, 2018, IFRS 9 Financial Instruments will replace IAS 39 Financial Instruments: Recognition and Measurement (IAS 39). Unlike most publications on IFRS 9, this paper focuses primarily on the application of the new standard on central banks’ foreign reserve assets, which increasingly constitute a substantial part of central banks’ balance sheet. Based on IFRS 9 implementation assessment projects with several central banks, the World Bank RAMP accounting team identified six factors that can help central banks determine appropriate business model for foreign reserve assets. Empirically, the result of applying the six factors has indicated that central banks’ reserve portfolios often display elements of more than one business model; hence management judgment coupled with a well-articulated accounting policy paper will be critical when implementing IFRS 9. Under most central banks reserves management frameworks, performing the solely payments of principal and interest (SPPI) test should be a relatively straightforward exercise, and the practical expedient option under the new impairment provisions should also apply.
format	Report
author	World Bank
author_facet	World Bank
author_sort	World Bank
title	Applying IFRS 9 to Central Banks Foreign Reserves
title_short	Applying IFRS 9 to Central Banks Foreign Reserves
title_full	Applying IFRS 9 to Central Banks Foreign Reserves
title_fullStr	Applying IFRS 9 to Central Banks Foreign Reserves
title_full_unstemmed	Applying IFRS 9 to Central Banks Foreign Reserves
title_sort	applying ifrs 9 to central banks foreign reserves
publisher	World Bank, Washington, DC
publishDate	2016
url	http://documents.worldbank.org/curated/en/2016/01/25810853/applying-ifrs-9-central-banks-foreign-reserves http://hdl.handle.net/10986/23770
_version_	1764454716776906752

Applying IFRS 9 to Central Banks Foreign Reserves

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