The Sovereign Rating Regulatory Dilemma

Jeffrey Manns

Chapter 7 in Emerging Markets and Sovereign Risk, 2015, pp 118-152 from Palgrave Macmillan

Abstract: Abstract Rating agencies have long served as convenient scapegoats for sovereign downgrades that reflect years of fiscal mismanagement and growing economic and political risks.1 The irony is that the existence of sovereign ratings reflects the need for external accountability of governments’ fiscal management.2 Politicians in both the developed and developing world have repeatedly demonstrated a remarkable ability to ignore fiscal realities and dissemble until a crisis is at their doorstep. For this reason markets value sovereign ratings both as proxies on how close governments are to the precipice of a default and as a tool of public pressure for fiscal restraint.3

Keywords: Rating Agency; Financial Crisis; Supra Note; Credit Rating; Credit Default Swap (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-45066-1_7

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DOI: 10.1057/9781137450661_7

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