Credit Rating Agencies in the European Union

Note: This contribution to a large extent repeats arguments that have been made in other publications by the same authors. As such, while fulfilling the criteria for a scientific publication, in the context of the SK it should probably count as a re-publication and thus receive only one point. This contribution discusses the position and power of Credit Rating Agencies (CRAs) in the light of the recent European regulatory activities. It combines insights from economics and law. The theme of this contribution is linked to the ESL research program 'Rethinking the Rule of Law in and Era of Globalisation, Privatisation, and Multiculturalisation' and in particular the subprogram 'Decrypting the Public Power Paradigm in Denationalising and Privatisation Legal Orders'. In the context of the global financial crisis and the euro area crisis CRAs have come under heavy criticism for the extent of power which they have over developments in the financial markets. As such CRAs highlight that macroeconomic policy is not only denationalized as a result of Euroeanization and globalization, but also subject to the action by private, profit-oriented, actors. In some instances these actors actually take an active role in the exercise of public power, as is the case with regard to credit rating that are used for regulatory purposes. The question that arises in this context is whether and under what conditions such a private involvement should be allowed.