More independent assessments to benefit objectivity while promoting competition

Several national rating agencies to be set up in the nearest time

By Alexander Timofeev

Several national rating agencies to be set up in the nearest time

Belarus is creating legislation to govern national rating agencies’ activity. Nadezhda Yermakova, the Chair of the National Bank’s Board, announced during a telephone hotline session and BelTA online-conference, “We have plans to set up several national rating agencies and believe that this approach will prove efficient, promoting healthy competition on the market of rating services.”

With interested ministries and organisations, the National Bank has prepared a draft concept to develop the system of assigning and using ratings on a national scale. At the moment, the document is being studied and, by late 2014, will be submitted to the President for approval. Until the Law ‘On Ratings and Rating Activity in Belarus’ comes into force, the Council of Ministers and the National Bank will decide on the temporary status of national rating agencies and recognise the ratings assigned by them.

Ms. Yermakova believes the decision is economically feasible — taking into account the present situation. Although around 100 rating agencies operate globally, over 90 percent of the market is overseen by just three agencies: Standard & Poor’s, Moody’s Investors Service and Fitch. Top officials and businessmen from around the world — including Germany, Italy, France, China and Russia — have repeatedly emphasised the need to impose constraints on this oligopoly, as the work of these rating agencies causes economic problems for some states and their economic entities, while affecting the global financial system. “Rating agencies are a powerful tool to influence the financial market. Any baseless increase or decrease in a rating destabilises the stock and exchange markets. In addition, ratings of leading world agencies are obviously politically motivated,” Ms. Yermakova stresses.

Many countries turned to establishing independent rating agencies after 2008. Member countries of the future Eurasian Economic Union — Russia and Kazakhstan — also have their own rating agencies. “National rating agencies create ratings for the domestic financial market and domestic investors. Jointly with ratings prepared by international agencies, these aim to ensure equal access to information on investment risks and to promote the development of the country’s financial market. The more independent ratings are, the more objective their information,” Ms. Yermakova asserts.
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