Is there a danger of artificial volatility because assets and liabilities are valued on different basis?
The Commission is aware that the carve out is not an ideal solution, and the removal of the fair value option for liabilities only (the full fair value option is possible for assets) might, indeed, cause temporarily some artificial accounting volatility in certain situations. This is why the Commission is pressing the IASB to complete its work in December 2004 However, for example in the case of unit-linked products, the Insurance Accounting Directive will help to overcome this problem. This Directive allows fair value measurement of both assets and the related liabilities.
