July 6 (Bloomberg) -- German Foreign Minister Guido Westerwelle called for an independent European rating company to be set up to avoid potential conflicts of interest.
“The current discussion about the downgrades and upgrades by the rating agencies show that on this issue there’s a need for institutional reform,” Westerwelle told reporters in Berlin today. “It’s necessary to establish an independent European rating agency.”
The German government “will work on this,” Westerwelle said at a joint press briefing with Greek Foreign Minister Stavros Lambrinidis. “This must be a goal that we all work on intensively.”
Westerwelle joins a barrage of criticism aimed at rating companies after Portugal was cut to junk by Moody’s Investors Service yesterday, one day after Standard & Poor’s said that French and German plans to encourage banks to roll over Greek debt might temporarily place Greece in “selective default.”
“There are too many interests intertwined,” said Westerwelle. “There are too many developments that take the real economic perspective in Europe too little into account.”
Finance Minister Wolfgang Schaeuble said earlier today that there’s a need to “break up” the dominance of the big three rating companies.
“We have to curb the influence of the rating agencies,” Schaeuble said in Berlin, adding that he “can’t see the basis” for the decision to downgrade Portugal.
Chancellor Angela Merkel warned yesterday against too much weight being placed on the rating companies when considering the creditworthiness of euro-area nations.
The so-called troika of the International Monetary Fund, the European Central Bank and European Commission that are on the ground assessing Greece’s adherence to its reform program mustn’t “surrender our ability to make judgements.”
“I place my trust above all in the assessments of these three institutions,” she said.
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