The conditions of global credit turmoil that affected the markets since August 2007, and worsened since September 2008, represent a historic opportunity for a truly new international financial architecture.
Against this backdrop, the misleading grades given by credit rating agencies to a number of sophisticated products that greatly impacted bank’s liquidity have placed the spotlight on these actors. The debate on what role should credit rating agencies play has, thus, become the focus of renewed attention.
This paper assesses this debate from the perspective of developing countries, to show that an agenda that continues to be debated in forums where they are not present, is likely to continue to sideline their substantive concerns. The FSF report’s agenda on Credit Rating Agencies is taken as a proxy of what the official agenda looks like and argues that it is far from suitable to address the concerns of developing countries.
The paper suggests some recommendations for an advocacy strategy with the short-term goal of bringing alternative view on CRAs onto the official debate and the longer-term objective of increasing the voice and participation of developing countries in the agenda for reform of the global financial system.