Debt crisis loosens top agencies' grip over credit ratings (3)

10:50, June 02, 2010      

Email | Print | Subscribe | Comments | Forum 

All fee-payers should enjoy corresponding consumers' rights and interests, and the rating process and the quality of the product provided by the rating agencies should be supervised. Meanwhile, the social and legal responsibilities of the rating agencies should be made clear. It should be noted that the prompt downgrades made by rating agencies not only showed their poor risk-prediction skills but also their lack of social responsibilities.

Since the outbreak of Greece's debt crisis, the debt credits of the euro zone countries were downgraded successively and triggered the depreciation of euro. Europe suddenly discovered that they had no say so in the area of rating. The credit rating set a price for credit capital and rating results determined the allocation of resources on the market.

The credit rating is not just a simple intermediary service, but the right of speech and ideally should allow representatives from various circles of society to participate in resources allocation and the pricing of credit capital. Nowadays, credit ratings are applied to many areas, such as the bond market, the credit market and business negotiations.

The one who controls credit ratings is the one who has say in the allocation of resources in these areas. In a market where credit ratings determine the allocation of resources, if the rating is monopolistic, those agencies that control the ratings industry have the last word.

Credit capital has become one of the most important conditions in the world economy and resource allocation. Having a voice in credit ratings is, in some ways, more important than the credit capital itself.

Different cultures and social customs means different forms of credit transactions, different credit value and different credit ratings. If credit rating agencies are established in Europe, it would trigger a "domino effect." It means that more and more European credit rating agencies would be established, and the U.S. stranglehold on the world debt market would be broken. Therefore, resource allocation would be more balanced and rational.

By People's Daily Online
【1】 【2】 【3】

(Editor:张心意)

  • Do you have anything to say?

双语词典
dictionary

  
Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • A ceremony is held in Taipei, southeast China's Taiwan, on Sept. 28, 2011, to commemorate the 2,562nd birthday of Confucius (551-479 BC), a Chinese thinker, educationist and philosopher. (Xinhua/Wu Ching-teng)
  • The world's first Boeing 787 Dreamliner for delivery arrives at Haneda airport in Tokyo, capital of Japan, on Sept. 28, 2011. The Boeing 787 Dreamliner, whose buyer is All Nippon Airways (ANA), will implement a flight of ANA on Oct. 26 from Tokyo's Narita Airport to Hong Kong in south China. (Xinhua/Ji Chunpeng)
  • A Libyan National Transitional Council (NTC) fighter shows what is believed to be human jawbone found inside a mass grave near Abu Salim prison in Tripoli, Libya, Spet. 27, 2011. The NTC on Sunday said they had found a mass grave containing the bodies of 1,270 people killed by Gaddafi's security forces in a 1996 massacre at Abu Salim prison in southern Tripoli. (Xinhua/Li Muzi)
  • Rescue workers and local residents search for survivors after a building collapsed in old Delhi, India, Sept. 27, 2011. At least 10 people were killed and 35 injured when an old three-storey building collapsed. More than a dozen people are still feared trapped under the debris, police said. (Xinhua/Partha Sarkar)
  • A visitor has flying experience in the windmill castle of Jinshitan National Holiday resort in Dalian, northeast China's Liaoning Province, Sept. 27, 2011. The castle is a 23-meter-high building with 21 meters in diameter. The castle uses wind tunnel to make objects floating in the air. It is the first indoor stadium in China, which enables people to have flying experience. (Xinhua/Zhang Chunlei)
  • Forces of the Libyan National Transitional Council (NTC) shoot shells to the fighters loyal to Muammar Gaddafi outside Bani Walid, Libya, Sept. 27, 2011. Bani Walid is still occupied by fighters loyal to Muammar Gaddafi. (Xinhua/Hamza Turkia)
Hot Forum Discussion