A reserve that captures the cumulative net change in the fair value of an asset as long as it is still recognized on the financial statements of an entity. For example, a fair value reserve for available for sale (AFS) financial assets (or investments) will be maintained until these assets/ investments are sold, disposed of, or impaired.

This reserve consists of non-distributable profits (fair value gains/ losses) and as such is used to ring-fence fair value gains and losses. This type of reserve is part of restricted equity, which also includes share capital and revaluation reserve. In specific cases, a fair value reserve may also include distributable elements (in which case, it would contradict the very nature of such a reserve).