Confusion reigns. If the world’s accounting bodies were deliberately trying to destroy confidence in bank financial statements, they could hardly have done a better job. The Financial Accounting Standards Board , the US standards setter, last week bowed to pressure to relax mark-to-market rules. Its international counterpart would prefer a comprehensive, six-month review to avoid piecemeal tweaks.

But another change to accountancy rules is more controversial and even harder to harmonise between the two regimes. Changes to how banks account for “other than temporary” impairments to debt securities will feed directly through to their capital ratios. Two members of the five-strong FASB board voted against this measure, compared with unanimous support for other changes. Banks will now be able to split declines in the value of debt securities into two buckets. Only the portion related to a fundamental deterioration in credit will hit income. Any fall in value due to “liquidity” is separated out. This should decrease the impact that falling valuations have on profit, possibly from the first quarter. The dissenters sensibly argue that the total value should still flow through the profit and loss account.