IFRS architect Paul Volcker dies

Paul Volcker, who played a major role in the setting up of the IFRS standard setter, the International Accounting Standard Board (IASB), and was a key player in US monetary policy for three decades, has died at the age of 92

In a statement following news of his death after a long illness, the trustees of the IFRS Foundation and members of the IASB said: ‘Mr Volcker was a committed public servant, held in the highest regard internationally and within the US.

‘Among the many accomplishments of his long career, he was appointed as the inaugural chairman of the IFRS foundation (formerly IASC foundation) trustees, serving from 2000 until 2006.

‘During this period, Mr Volcker led the restructuring of the foundation, appointed the first board and garnered widespread international support for its mission of global accounting standards.

‘Many of the Foundation’s achievements in subsequent years are therefore thanks to the path set out by Mr Volcker during his tenure as chairman of the trustees.’

Volcker came to prominence in the early 1980s, after President Jimmy Carter nominated him to become chair of the Federal Reserve Bank of New York in 1979, after a four-year spell as its president.

In his first term, Volcker focused on reducing inflation and conveying to the public that increased interest rates were the result of market pressures and not board actions. He became one of the most unpopular Federal Reserve  chairmen in history for pushing interest rates as high as 20% in a bid to squeeze out the high inflation rates which had hit the US during the 1970s.

Volcker also monitored the debt crisis in developing countries and supported the expansion of the International Monetary Fund’s reserve fund.

During his second term, Volcker made expanding the money supply without increasing inflation his priority. He also won praise for structural reform of the board of governors, which involved protecting the Federal Reserve’s regulatory authority and restricting commercial banks’ activities that were considered risky. Volcker opposed giving commercial banks the ability to underwrite corporate securities and take part in real estate development.

Volcker also served as a chair of President Obama’s economic recovery advisory board from 2009 to 2011. In that role, Volcker made a significant contribution to the Dodd-Frank Wall Street Reform and Consumer Protection Act by introducing the Volcker Rule. 

This provision prohibits banking entities from engaging in proprietary trading in securities, derivatives, or certain other financial instruments and from investing in, sponsoring, or having certain relationships with a hedge fund or private equity fund.

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