EU Commission proposes tightening of regulations on credit rating agencies

Abstract

Credit rating agencies assess the probability of the insolvency of governments, non-financial corporations, banks and other financial corporations. Credit ratings are used by several types of entities, eg banks, insurance corporations, and other investors, and they play an important role in the financial market. Credit rating agencies have recently been much criticized for the weaknesses of the rating methods and models. During the current financial market crisis, the quality of ratings of various structured financial instruments, in particular, have turned out to be poor, which has weakened markets and authorities confidence in credit ratings and the agencies issuing them.