Washington — Convergence in accounting standards between the United States and the European Union is the most important issue facing capital markets in both regions, according to financial experts who recently testified before a House panel.

During a hearing before the House Financial Services Subcommittee on Domestic and International Monetary Policy, convergence on international accounting standards and surrounding issues were cited as the most pressing topic.

“Differences in philosophy regarding the role of government in the private markets, as well as different policy priorities, can create tensions and can increase compliance costs for financial firms,” Rep. Michael Oxley, R-Ohio, chairman of the House Committee on Financial Services, said in his opening address. “My conclusion is that the regulatory dialogue between the U.S. and the European Union actually takes many forms, and regulators on both sides of the Atlantic are being creative in finding ways to work together. We must work more closely together.”

Under Securities and Exchange Commission regulations, foreign firms may only issue securities or list on U.S. exchanges if they conform to U.S. generally accepted accounting principles. Opponents of convergence have said that U.S. GAAP does a better job of protecting investors, but that argument has lost much of its credibility in the wake of the spate of domestic accounting scandals.

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