THE European Central Bank (ECB) rejected a proposal that it issue credit ratings and voiced doubts about a European Commission idea to establish a publicly funded agency to compete with firms such as Standard & Poor's, Moody's Investors Service and Fitch Ratings.
"The ECB should not issue public ratings to be used for regulatory purposes," the Frankfurt-based central bank said in its response to the commission's proposals.
Still, the ECB "fully supports the efforts to reduce the reliance of financial markets and the official sector on credit rating agency ratings", the ECB said in the document, published on its website yesterday.
ECB policy makers have criticised rating firms for announcing changes in sovereign ratings just as Europe's debt crisis was unfolding, exacerbating market turmoil.
German finance minister Wolfgang Schaeuble said last summer that the "oligopoly" of the main rating firms should be broken.
At the time Luxembourg's prime minister Jean-Claude Juncker, who heads the group of euro-area finance ministers, called for the creation of a European ratings company overseen by the ECB.
In yesterday's report, the ECB indicated it doesn't support the establishment of a European Credit Rating Agency backed by public funds.
"The degree of independence of such an agency funded wholly or partially by public money remains to be assessed," it said. "The practical issue of building a track record over several years could make the agency not operative for some time."