1. Produce a report covering the following issues:

(i) Define and describe Credit Rating Agencies and their major operations within the global financial system. Do they satisfy these roles, especially in terms of anticipating future financial turmoil’s? (40 marks)

(ii) Many commentators state that misleading credit ratings had a direct and immense effect on the development of the Global Financial Crisis. Provide your personal view on this statement, using examples from the recent crisis to support your arguments. (20 marks)

(iii) Given the above criticism of Credit Rating Agencies, the idea of the creation of a European Credit Rating Agent has been put forward by some European policy makers. Describe and discuss the potential positive and negative effects of this proposal. (20 marks)

(iv)

1. Produce a report covering the following issues:

(i) Define and describe Credit Rating Agencies and their major operations within the global financial system. Do they satisfy these roles, especially in terms of anticipating future financial turmoil’s? (40 marks)

(ii) Many commentators state that misleading credit ratings had a direct and immense effect on the development of the Global Financial Crisis. Provide your personal view on this statement, using examples from the recent crisis to support your arguments. (20 marks)

(iii) Given the above criticism of Credit Rating Agencies, the idea of the creation of a European Credit Rating Agent has been put forward by some European policy makers. Describe and discuss the potential positive and negative effects of this proposal. (20 marks)

(iv) What would be your suggestions, as regulatory experts, to improve Credit Rating Agents’ performance in risk assessments? (20 marks)

Markets operate on trust. More than 150 years ago, as the American frontier pushed westward, merchants found themselves doing business with far-flung firms with which they did not have direct relationships. Credit rating agencies were born in response to this need. They provided impartial, independent assessments of reliability; those who extended credit to highly rated firms could be assured their loans would be repaid. As the industry evolved, it came to be dominated by giants such as Moody’s, Standard & Poor’s and Fitch. Over the decades, though rating services became global and highly complex, the basic idea remained the same: A Triple-A rating meant your money was safe. That is how credit ratings safeguarded trust that sustained markets.