ECCB
ANNUAL REPORT 2014/2015
59
EASTERN CARIBBEAN CENTRAL BANK
2.
Summary of significant accounting policies
…continued
f) Finanical assets and liabilities
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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 consolidated statement 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 consolidated statement of income 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(expressed in Eastern Caribbean dollars)
March 31, 2015
