FASB drops plan to extend mark-to-market rules to loans

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The Financial Accounting Standards Board (FASB), the United States body tasked with developing the Generally Accepted Accounting Principles (GAAP) used in the country, on Tuesday reversed its position on proposals that would have forced banks to value most of their loans at market prices.

The FASB board decided that loans would instead be measured at amortised cost - a method that used the adjusted historical cost of the loan, which will insulate them from volatility in short-term prices.

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