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Addicted to Ratings: The Case for Reducing Governments’ Reliance on Credit Ratings

Authors
Disciplines
  • Economics
  • Political Science

Abstract

Credit rating agencies have been blamed for their role in the recent financial crisis, notably for having assigned high ratings to complex financial instruments that yielded billions in losses to investors. As a consequence, a number of reforms have been proposed or introduced – including for example increased disclosure of rating methodologies. This Backgrounder argues that reducing the government use of credit ratings may be the single most important step towards restoring the credibility and integrity of rating agencies.

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