ECCB 2016/2017 Annual Report

ECCB ANNUAL REPORT 2016/2017

EASTERN CARIBBEAN CENTRAL BANK

NOTES TO THE FINANCIAL STATEMENTS

(expressed in Eastern Caribbean dollars)

March 31, 2017

Eastern Caribbean Central Bank

Notes to the Financial Statements

March 31, 2017

(expressed in Eastern Caribbean dollars)

2. Summary of significant accounting policies

…conti

nued

f) Financial assets and liabilities

…continued

Financial liabilities

The Bank’s financial liabilities are measured at either fair value through profit or loss or at

amortised cost.

(i) Financial liabilities at fair value through profit or loss

This category is comprised of financial liabilities classified as held for trading, and financial

liabilities designated by the Bank as at fair value through profit or loss upon initial

recognition.

A financial liability is classified as held for trading if it is acquired or incurred principally for

the purpose of selling or repurchasing it in near term or if it is part of a portfolio of identified

financial instruments that are managed together and for which there is evidence of a recent

actual pattern of short-term profit taking. Derivatives are also categorised as held for trading

unless they are designated and effective as hedging instruments. Financial liabilities held for

trading also include obligations to deliver financial assets borrowed by a short seller. Those

financial instruments are recognised in the stat

ement of financial position as “

Financial

liabilities held for trading”

. Gains and losses arising from changes in fair value of financial

liabilities classified as held for trading are included in the statement of profit or loss.

(ii) Other liabilities measured at amortised cost

Financial liabilities that are not classified as fair value through profit or loss fall into this

category and are measured at amortised cost. Financial liabilities measured at amortised cost

are substantially comprised of: deposits from member banks and participating member

governments’ deposit accounts.

(iii) Derecognition

Financial liabilities are derecognised when they have been redeemed or otherwise

extinguished.

Determination of fair value of financial assets and liabilities

For financial instruments traded in active markets, the determination of fair values of financial

assets and financial liabilities is based on quoted bid prices or dealer price quotations. This

includes quoted debt instruments on major exchanges.

A financial instrument is regarded as quoted in an active market if quoted prices are readily and

regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory

agency, and those prices represent actual and regularly occurring market transactions on an arm’s

length basis. If the above criteria are not met, the market is regarded as being inactive. Indications

that a market is inactive are when there is a wide bid-offer spread or significant increase in the bid-

offer spread or there are few recent transactions. In cases when the fair value of unlisted equity

instruments cannot be determined reliably, the instruments are carried at cost less impairment.