Wednesday, November 16, 2011
NEW rules to ensure greater transparency in the ways credit rating agencies work have been agreed by the European Commission — but proposals to suspend ratings for countries in debt programmes, such as Ireland, were taken off the table.
Internal Market Commissioner Michel Barnier said: "We agreed to postpone the proposal of having temporary suspension of a sovereign debt in certain cases — we had a long and detailed discussion and I believed we needed more time to really go into detail on the technical measures of how such a suspension could be implemented."
He said he had in mind the events of a few months ago with Greece, Portugal and Ireland, when ratings fell the very day or on the eve of announcements of pan governmental action plans. "Our feeling is that ratings that drop just like that at the last minute without an explanation can create instability."
He was looking for a degree of solidarity from the international community that there could be a temporary suspension of two months for a country supported by the EU to give that country time to implement the necessary measures.
He said the idea will be worked on further over the next few months.
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