Merkel says European rating agency 'could be useful'

4th May 2010, Comments 0 comments

German Chancellor Angela Merkel said on Monday that a European rating agency "could be useful" in wake of the Greek debt crisis, along with "possible changes" to the EU stability and growth pact.

"We will press for the creation of a rating agency in Europe so that European financial markets become more stable and reactive," Merkel told reporters in Berlin, saying it "could be useful."

Rating agencies have come under fire for cutting Greece's debt to junk status and downgrading the ratings of Portugal and Spain, unsettling investors and sending the countries' borrowing costs on financial markets rocketing.

Last Wednesday the European Commission called on the agencies to act "in a responsible way."

Merkel, whose country is reluctantly set to be the biggest contributor to a 110-billion-euro (146-billion-dollar) Greek aid package, also redoubled calls for changes to the EU rulebook to ensure that future crises are averted.

"It is the task of this government to configure this stability pact in such a way as to ensure that it cannot be undermined and that it is strictly adhered to," Merkel said.

She added that she would propose to fellow EU heads of state and government ways to improve joint coordination as well as "possible treaty changes to make possible an adequate reaction (to crises) in the future."

Previously Merkel has said that EU nations with excessively high deficits should face sanctions.

On the Greek bail-out, approved by eurozone finance ministers on Sunday, Merkel said "it does not just mean we are helping Greece but also that we are stabilising the euro as a whole, thereby helping people in Germany, for whom a stable European currency is of extrordinary value."

Earlier in Paris, French Finance Minister Christine Lagarde said that there should be closer supervision of credit ratings agencies to ensure that they respected the rules.

She said on French radio: "One does not downgrade a country in conditions when its notation has already been downgraded, that is to say fifteen minutes before the closure (of the markets) to precipitate buying or selling."

© 2010 AFP

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