Credit Rating Agencies (Regulation)
cepPolicyBrief

Financial Markets

Credit Rating Agencies (Regulation)

The wishes to limit the term of the contracts entered into by credit rating agencies and issuers as well as the participation volume in credit rating agencies in order to strengthen the independence of credit rating agencies. In future, structured finance instruments will be subjected to ratings by at least two credit rating agencies. Moreover, the Commission wishes to prescribe civil liability for credit rating agencies. 

cepPolicyBrief

Status

Viewed from a competitive economic standpoint, there is no need for regulation. Credit rating regulation is justified only for supervisory purposes due to the stability of the financial market. Although the rotation rule increases the independence of credit rating agencies, it also distorts competition, reduces the quality of ratings and thus has a negative impact on growth. The rule on double ratings for structured finance instruments jeopardizes the stability of the financial market. 

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Credit Rating Agencies COM(2011) 747 (publ. 06.20.2014) PDF 267 KB Download
Credit Rating Agencies COM(2011) 747
cepAccompanyingDocument (in German only) (publ. 06.20.2014) PDF 39 KB Download