The decision by credit-rating agencies to downgrade some countries’ sovereign credit rating is unbeneficial to the current financial order, according to senior officials of the European Central Bank. Central banks of European countries are too reliant on those credit-rating agencies, which is unwise.
Bank of France president Christian Noyer said credit-rating agencies always make mistakes when rating some countries’ sovereign credit like Greece. Considering the fact that the varieties of collateralized mortgage bonds used by central banks of all nations in Europe are subject to related credit-rating systems, inappropriate rating results will inevitably influence the proper central bank behavior, which is unsatisfactory and should be rectified by lowering the dependence on credit-rating agencies, Noyer said. Greece, Portugal, Ireland and Spain are countries that have suffered sovereign credit rating degradation in the last few months. Source: People’s Daily Online
Editorial Comment: It has become apparent that the Greek government falsified its accounts and the EU commission bought into it when it admitted Greece into the Euro zone. The credit rating agencies therefore relied on the same information as the EU commission did. Therefore the downgrading of Greece seems to be quite in order.