The International Monetary Fund published a technical note setting out how banking supervisors should oversee the implementation of International Financial Reporting Standard 9, or IFRS 9. It calls for supervisors to establish clear expectations, verify that banks’ asset classifications and expected credit loss provisions are prudent and consistent, and take corrective action where outcomes are inadequate. The note highlights particular implementation challenges for emerging market and developing economies, including gaps in data, modeling expertise, information technology and supervisory capacity. Supervisory expectations should cover definitions of default, significant increases in credit risk, macroeconomic scenarios, collateral valuation, model governance and data quality. Authorities should consider well-sequenced multiyear transition periods, temporary regulatory provisioning backstops and capital transitional arrangements, while adapting methodologies and timelines to banks’ size, complexity and risk without weakening prudence. Supervisors should also monitor residual procyclicality, ensure timely loss recognition and adequate capital buffers, and encourage banks to develop capabilities for incorporating climate-related financial risks into valuations and expected credit losses.
2026-03-27International Monetary Fund
International Monetary Fund outlines supervisory framework for sound and proportionate IFRS 9 implementation
The International Monetary Fund outlined a supervisory framework for prudent and consistent IFRS 9 implementation, with particular attention to capacity constraints in emerging market and developing economies. It supports clear supervisory expectations, rigorous review and corrective powers, alongside proportionate transition periods and temporary prudential backstops. Supervisors should also address procyclicality through timely loss recognition and adequate capital buffers.