Juncker Urges More Efforts to Create European Rating Agency
Luxembourg’s Prime Minister Jean- Claude Juncker said that European governments need to step up their efforts to create a credit-rating company for Europe to circumvent the “disastrous” influence of the existing firms.
A European rating company would be more in tune with reform programs undertaken by governments in the region and so provide more accurate assessments of creditworthiness, said Juncker, who chairs the group of euro-area finance ministers.
“I’m really of the opinion that we should intensify our efforts to create a European rating agency in order to be able to better judge the medium-term outlook for the European states,” Juncker said in an interview in Berlin today.
Juncker joins a barrage of criticism aimed at rating companies after Portugal was cut to junk by Moody’s Investors Service on July 5. That came one day after Standard & Poor’s upset French and German plans to encourage banks to roll over Greek debt, saying that such a move might temporarily place Greece in “selective default.”
“We shouldn’t only orient ourselves toward the verdicts of the rating agencies,” Juncker said. “I’m saying this for the commission, the council and partially also for the European Central Bank.”
Juncker, speaking later to reporters in Berlin, said the rating companies’ influence is a “disastrous one” because downgrades might discourage governments from taking further reform steps. “So I’m calling them to a more responsible behavior,” he said.
Juncker said he has urged a Europe-based rating agency “for months.”
“This is a good idea but not an easy one to implement,” he said. “So we have to work on this.”
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