Europe mulls curbing influence of “big three” rating agencies

Europe is looking to curb the influence of the big three credit rating firms after Moody's Investors Service for downgraded Portuguese debt earlier this week. On Thursday European bankers said they would accept its ratings on Portugual  notwithstanding.

The European Central Bank's decision to waive a minimum rating required to accept collateral for credit from Portugal comes as a clear signal of the growing distrust of the rating agency.

However Moody's is not alone, the two other big US-based rating firms, Fitch and Standard & Poor's do not fare any better.

In effect, in Europe the clear message sought to be delivered is to them is that their services are no longer required.

Germany seems to be keen on taking the lead and has called for the creation of a European rating agency.

Criticism of the influence wielded by the three firms has been mounting after the 2008 financial crisis and that criticism has now risen to a full-throated roar in Europe.

Analysts say the move by European bankers was understandable for a couple of reasons, as firstly, there was a widespread perception in Europe that the timing of Moody's decision to downgrade Portuguese debt only served to worsen an already-bad situation.

Further, the decision served to reinforce suspicions widely held suspicions among European fiscal decision-makers that the credit firms were harder on European-issued debt than they were on debt issued in the US.