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The very fact that CRAs are now regulated may be seen as some sort of seal of approval which is at odds with the European Commission’s current desire to reduce reliance on credit ratings by both regulators and financial institutions.
Guy Sears, Director of Wholesale at the IMA, said: “Rating agencies have made responsible and sensible decisions. Their recent downgrading of European countries has reflected, not caused, underlying fiscal problems. However, the agencies may be seen to hold disproportionate sway over global markets, not least because they are embedded in regulations such as Solvency II and CRD and in institutional client mandates.“
“Actions to reduce reliance on credit ratings agencies make sense, but the reality is they will remain an important part of the financial market infrastructure for years to come.”