Brussels has warned that a radical overhaul of rules on how banks value their assets could lead to greater volatility in the their accounts, undermining broader financial stability.
European Commission officials have sent a letter to the International Accounting Standards Board criticising the rule-setting body's proposals for financial institutions, the first stage of which are scheduled to be published this week.
The overhaul is aimed at addressing criticism of so-called “fair value” accounting, the system of valuing assets at market prices. When markets fell sharply, banks were forced to mark down the value of their assets, leading to heavy losses.