July 18, 2018 / 1:55 PM / 2 months ago

Finland's Liikanen to head global accounting rules setter

LONDON (Reuters) - Erkki Liikanen, former governor of Finland’s central bank, will chair the trustees who oversee accounting standards used in over 100 countries, the trustees said on Wednesday.

FILE PHOTO: Governors Jorgovanka Tabakovic of National Bank of Serbia and Erkki Liikanen of the Bank of Finland wait for the International Monetary Fund Governors family photo during the IMF/World Bank spring meeting in Washington, U.S., April 21, 2018. REUTERS/Yuri Gripas/File Photo

The IFRS Foundation Trustees said Liikanen will replace Michel Prada, who has been chair since 2011. The trustees oversee the International Accounting Standards Board (IASB), a London-based body that writes accounting standards.

The appointment of a well-known European former policymaker is likely to be warmly welcomed by the European Union, where IASB rules are mandatory for listed companies.

Europe’s adoption of IASB standards gave them the critical mass to persuade many other countries to follow suit. The IASB has, however, been unable to persuade the United States to adopt its rules.

Liikanen, who had been touted as a potential replacement for European Central Bank President Mario Draghi, is a former EU commissioner and former finance minister of Finland.

“(The IASB’s) IFRS Standards have a major role in the global financial system,” he said in a statement.

IASB rules came under attack during the 2007-09 financial crisis for leaving banks with too little provisioning for loans that turned sour in the market meltdown, forcing taxpayers to bail out lenders.

Loan provisioning accounting rules have since been toughened up.

Reporting by Huw Jones; Editing by Toby Chopra

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