Regulating credit ratings agencies: where to now?
This paper reviews current proposals to regulate credit rating agencies. They proposals can be classified in two broad areas: (1) micro-prudential measures and (2) measures to expand and refine the regulatory perimeter. While the previous regulations relied on micro-prudential measures, experience from the U.S. subprime crisis and the European sovereign debt crisis shows that such an approach did not address the negative externalities from credit ratings, prompting the need to expand the regulatory perimeter. This paper highlights two types of regulation seeking to expand the regulatory perimeter: (i) those that attempt to take credit ratings out of regulation such as Section 939A of the 2010 Dodd-Frank Act and (ii) those that aim to reduce the importance of credit ratings in regulation such as the recent changes to the ECB collateral rules. This paper argues, however, that, it remains important that policymakers conduct formal assessments of the impact of the use of credit ratings on financial markets, especially in private contracts such as credit default swaps (CDS) and institutional investors’ investment policies. Additional capital requirements and/or liquidity buffers could be used if necessary to mitigate the systemic risk of credit ratings.
Volume (Year): 31 (2011)
Issue (Month): ()
|Contact details of provider:|| Postal: |
Phone: +1 212 284 8600
Web page: http://www.capco.com/Email:
When requesting a correction, please mention this item's handle: RePEc:ris:jofitr:1444. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Springett)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.