ECCB 2017-2018 Annual Report and Statement of Accounts

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ECCB ANNUAL REPORT 2017/2018

(expressed in Eastern Caribbean dollars) Eastern Caribbean Central Bank Notes to the Financial Statements March 31, 2018 (expressed in Eastern Caribbean dollars) 2. Summary of significant accounting policies …continued a) Basis of preparation ...continued

EASTERN CARIBBEAN CENTRAL BANK NOTES TO THE FINANCIAL STATEMENTS

March 31, 2018

Standards, interpretations and amendments to published standards that are not yet effective and have not been early adopted …continued (iii) Impairment of financial assets...continued Preliminary impact assessment The Bank has conducted a preliminary assessment of impairment on its foreign reserves portfolio using credit risk models specifically targeted for expected loss purposes to determine the inputs into the ECL calculation (such as the probability of default, loss given default and exposure at default) on both a 12-month and lifetime basis. Based on the initial assessment, the projected impact on the Bank’s financial position and performance is insignificant at this stage. The Bank has not yet conducted a preliminary assessment for its domestic portfolio. This analysis requires the identification of the credit risk associated with the counterparties. The counterparties are mainly Governments and corporations for foreign investments, Participating Governments for domestic investments and receivables from customers. As it relates to investments, management intends to review macro-economic factors of each country as well as specific credit rating information for securities (where available) to aid with its impairment assessment. (iv) Classification – Financial liabilities IFRS 9 largely retains the existing requirements in IAS 39 for the classification of financial liabilities. However, under IAS 39 all fair value changes of liabilities designated as at FVTPL are recognised in profit or loss, whereas under IFRS 9 these fair value changes will generally be presented as follows: — the amount of change in the fair value that is attributable to changes in the credit risk of the liability is presented in OCI; and — the remaining amount of change in the fair value is presented in profit or loss. There is no expected impact on the Bank’s accounting for financial liabilities, as the new requirements only impact financial liabilities that are designated at fair value through profit or loss, and the Bank does not currently have any such liabilities. (v) Disclosures IFRS 9 will require extensive new disclosures, in particular about credit risk and ECLs. The Bank’s assessment included an analysis to identify data gaps against current processes and the Bank is in the process of implementing the system and controls changes that it believes will be necessary to capture the required data.

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