ECCB 2015/2016 Annual Report

EASTERN CARIBBEAN CENTRAL BANK

NOTES TO FINANCIAL STATEMENTS

Eastern Caribbean Central Bank Notes to Financial Statements March 31, 2016 (expressed in Eastern Caribbean dollars) 3. Financial risk management … continued f) Fair value …continued Fair Value Hierarchy Financial risk management … continued f) Fair value … continued Fair Value Hierarchy

(expressed in Eastern Caribbe n dollar )

March 31, 2016

3.

IFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources; unobservable inputs reflect the Bank’s market assumptions. These two types of inputs have created the following fair value hierarchy: - Level 1: Quoted prices in active markets for identical assets and liabilities. - Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). - Level 3: Inputs for the assets or liabilities that are not based on observable market data. This level includes equity investments and debt instruments with significant unobservable components. The hierarchy requires the use of observable market data when available. The Bank considers relevant and observable market prices in valuations where possible. The following table presents the Bank’s financial assets and liabilities that are measured at fair value at March 31, 2016: Level 1 Level 3 $ $ Financial assets Commercial paper 381,521,788 – Certificate of Deposits 40,500,168 – Financial assets held for trading 245,988 – Available-for-sale – foreign investment securities 2,862,778,837 – Available-for-sale – domestic investment securities – 421,686 3,285,046,781 421,686 IFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independ nt sources; unobser ble inputs reflect the Ba k’s market assumptions. These two types of inputs have created the following fair value hierarchy: - - Level 1: Quoted prices in active markets for identical assets and liabilities. - - e el 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). - - Level 3: Inputs for the assets or liabilities that are not based on obser able arket data. This level includes equity investments and debt instruments with significant unobservable components. The hierarchy requires the use of observable market data when available. The Bank considers relevant and observable market prices in valuations where possible. The following table presents the Bank’s financial assets and lia ilities t at re eas red at f ir al e at March 31, 2016:

Level 1

Level 3

$

$

Financial liabilities Financial liabilities held for trading

6,196,019

-

87

87

ECCB A nnual R eport 2015/2016