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Rating agencies and sovereign credit risk assessment. Bruegel Policy Contribution 2011/17, 15 December 2011

Véron, Nicolas. and Wolff, Guntram B. (2011) Rating agencies and sovereign credit risk assessment. Bruegel Policy Contribution 2011/17, 15 December 2011. [Policy Paper]

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    Abstract

    Credit rating agencies (CRAs) have not consistently met the expectations placed on them by investors and policymakers. It is difficult, however, to improve the quality of ratings through regulatory initiatives. In the short term, changes to the CRAs’ regulatory environment, in a context of high market uncertainty, may add to market stress. The role of credit ratings in regulation should be reduced but eliminating it entirely would have significant downsides, at least in the short term. The transfer of ratings responsibility to public authorities, including the European Central Bank, is unlikely to be a good alternative because of inherent conflicts of interest. The notion of risk-free sovereign bonds is challenged by the crisis, but the most straightforward way to address this challenge in the euro-area context would be the establishment of a euro-area-wide sovereign bond instrument.

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    Item Type: Policy Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > regulations/regulatory policies
    EU policies and themes > Policies & related activities > economic and financial affairs > Single Market > capital, goods, services, workers
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Bruegel (Brussels) > Policy Contributions
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 21 Dec 2011 17:04
    Number of Pages: 6
    Last Modified: 21 Dec 2011 17:04
    URI: http://aei.pitt.edu/id/eprint/33173

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