Currently, the cross-country comparison of financial information is difficult, since the set of rules under which such information is compiled varies from country to country. Moreover, the interpretation of such rules is not always uniform. This is cost-inefficient for those companies having to comply with different accounting regulations because they operate in more than one geographical region. Likewise, the lack of comparability may hamper cross-border activity and decision-making by investors. There have been some encouraging developments in this area. First, is the memorandum of understanding between the IASB and the Financial Accounting Standards Board (FASB) formalising a commitment to convergence towards common principle based accounting standards. Admittedly, this will not be an easy task, but it seems vital to move in this direction. Second, the European Union has taken a significant step forward. It has resolutely considered need to promote the comparability of different countries’ financial information as an unavoidable prerequisite for achieving the single financial market. 2  BIS Review 31/2003  Accordingly, a Regulation was approved last year adopting the International Accounting Standards (IAS). Specifically, in 2005 companies listed on regulated financial markets will have to prepare their consolidated financial statements in accordance with these standards. The thrust of this Regulation is to achieve clear pan-European rules for comparable, transparent financial reporting throughout the European Union. Rules which will make companies provide relevant and reliable information for investors and other stakeholders so that they can make meaningful cross-border and cross-sector comparisons. But accounting regulation also poses significant difficulties.

This moderation has mainly been a consequence of lower growth in the most liquid components of M3, which bear little or no remuneration, indicating that the monetary policy measures taken since November 1999 are gradually feeding their way through. At the same time, the average of annual M3 growth rates for the period from May to July 2000, at 5.5%, continued to deviate on the upside from the reference value of 4½%. The pronounced expansion of credit to the private sector up to July also suggested that households and firms continued to regard financing conditions in the euro area as favourable. In the context of the robust expansion of economic activity, continued ample liquidity conditions would constitute a risk to price stability. Turning to the second pillar, real GDP growth in the euro area, according to first estimates published by Eurostat today, reached 3¾% (on an annualised basis) in the first half of 2000. Currently available forecasts predict that growth will remain above 3% next year. The strength of the euro area’s economic expansion in the past few months is in line with these forecasts. In fact, recent indicators suggest that, following the period of acceleration, the economic expansion may now have settled at a high rate of growth. The overall level of confidence has remained at, or close to, record highs in recent months. Moreover, employment continued to grow strongly in the first half of this year and the rate of capacity utilisation has risen further.