The International Accounting Standards Board (IASB) has proposed a new accounting model to improve transparency on how financial institutions manage interest rate risk throughout their portfolios.

This follows calls from the users of financial statements for more clarity.

The proposed Risk Mitigation Accounting model responds to feedback from financial institutions and investors that the current hedge accounting requirements do not adequately reflect how interest rate risk is managed in practice.

The model aims to provide greater transparency into how interest rate risk management affects financial performance and future cash flows in a dynamic environment.