The International Accounting Standards Board has accelerated its project to replace controversial accounting rules on financial instruments.

An update published after a recent board meeting says it will now publish an exposure draft on the classification and measurement of financial instruments by July 2009. Previously it said the proposals would not be available until October. The earlier deadline will allow banks to use the new rules when they prepare their 2009 financial statements.

The acceleration of the project comes after intense pressure from European politicians who want the IASB to act faster on reform. They blame its accounting rules for exacerbating the financial crisis.

The IASB pledged to the G20 in April that it would have a draft standard to replace IAS 39, Financial Instruments: Recognition and Measurement, ready by October. Board chairman Sir David Tweedie has tried to resist pressure to make smaller reforms in the meantime, by arguing that the topic needed to be “fixed comprehensively.”

Now the board says it will have an exposure draft on the classification and measurement of financial instruments ready by July 2009. That paper will not deal with hedge accounting, a topic the board says it will cover in a separate exposure draft “to follow shortly thereafter before the end of this year.”

Meanwhile, the board has published an exposure draft of guidance on fair-value measurement.  If adopted, the proposals would replace the fair value measurement guidance contained in individual International Financial Reporting Standards with a single, unified definition of fair value. The proposals include guidance on the application of fair-value measurement in inactive markets.

The IASB said its proposed definition of fair value is identical to the definition in FASB’s SFAS 157, Fair Value Measurements, and its supporting guidance is also “largely consistent” with U.S. GAAP.