Risk & Compliance: Are we Walking toward Real Credit Ratings in a Growing Virtual Economy

With the big buzz around Credit rating and cost of borrowing increase fear, it is legitimate to wonder:

Why is EU relying on US agencies for these credit ratings?

Why does EU rely on US Credit Rating Agencies at all? Why is the assessment of credit worthiness of EU countries and EU Companies, which as far as I am aware of is made upon “history” of borrowing and repayment, availability of assets and extent of liabilities…why is this assessment done by US agencies? US Agencies which obviously do not have the visibility that EU banks have on their customers credit worthiness.

Facts:

In the US: 94 percent of the S&P500 firms are assessed

In EU: Credit ratings are not as widely spread – only half of all German DAX-30 firms have a credit rating

Then I realized that EU is taking action, signs are there of European financial institutions creating the operational infrastructure to ensure credit & compliance, as well as AML activities. Infrastructure which potentialy could lead the said EU financial Institutions to reach a point where they would have the ability to take up the “Credit Rating” job currently done by US agencies.

Institution infrastructure monitoring with on the other side an EU strengthening of policies on risk and compliance in various areas, as per Lisbon goals on legal consolidation. Would seem to indicate that EU is in the process of consolidating operational processes to secure EU markets stability putting in place efficient compliance monitoring policies which go behind single countries reminders on need for budgetary controls.

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