| Description |
1 online resource (36 pages) : illustrations |
| Series |
IMF working paper, 2227-8885 ; WP/09/129 |
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IMF working paper ; WP/09/129.
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| Contents |
I. Introduction; II. Lessons from Previous Rating Crises; III. Credit Ratings in Capital Markets; A. The Demand and Supply for Credit Ratings; B. Use of Credit Ratings in Legislation, Regulations and Supervisory Policies (LRSPs); C. Costs and Benefits of Ratings; IV. The Systemic Risk of Ratings; V. Role of CRAs in Structured Products Markets; A. The Rapid Growth of Structured Products; B. AAA as the Gold Standard; VI. Model Risk in the Rating of Structured Credit Products; VII. Governance Issues in the Rating of Structured Credit Products; VIII. Policy Recommendations |
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A. Regulating CRAsB. Regulating Rated Securities Markets; C. Ensuring Systemic Stability; IX. Conclusions; X. Reference |
| Summary |
Credit ratings have contributed to the current financial crisis. Proposals to regulate credit rating agencies focus on micro-prudential issues and aim at reducing conflicts of interest and increasing transparency and competition. In contrast, this paper argues that macro-prudential regulation is necessary to address the systemic risk inherent to ratings. The paper illustrates how financial markets have increasingly relied on ratings. It shows how downgrades have led to systemic market losses and increased illiquidity. The paper suggests the use of "ratings maps" and stress-tests to assess the systemic risk of ratings, and increased capital or liquidity buffers to manage such risk |
| Notes |
At head of title: IMF Institute |
|
"June 2009." |
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"This paper is based on a presentation at the October 2008 Conference of the AMF Scientific Advisory Board, "Structured Finance Products: What Are the Challenges for Markets and Regulators," AMF and Banque de France, Paris |
| Bibliography |
Includes bibliographical references (pages 33-36) |
| Notes |
Print version record |
| Subject |
Financial crises
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Rating agencies (Finance)
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Financial instruments.
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Credit ratings -- Law and legislation
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Risk management.
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Risk Management
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risk management.
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Financial crises
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Financial instruments
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Rating agencies (Finance)
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Risk management
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| Form |
Electronic book
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| Author |
International Monetary Fund.
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IMF Institute.
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| ISBN |
1282843435 |
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9781282843431 |
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9781451917055 |
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1451917058 |
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