Why are CRAs relevant?

• v  It is clear that some form of credit rating is needed for the efficient functioning of the market. What is not clear is how credit rating should be done. The current model has massive flaws and, in the aftermath of the financial crisis, we are still struggling to come up with an alternative.

• v  Some argue that regulation by the US Securities and Exchange Commission (SEC) and the Federal Reserve (Fed) has forced issuers to depend on the big three, creating an unholy oligopoly. Others blame EU regulation of doing the same. Still others argue that standardized assessments of credit risk as done primarily by S&P and Moody’s, two private US agencies, are part of an untenable model.

• v  The challenge for our times is the creation of a new CRA model. Do we need more agencies from many countries as new lenders emerge and markets develop in other parts of the world? Should we revert to the old model where the subscriber pays instead of the issuer? Or is the future some sort of a business model that is collaborative and transparent as the Wikirating experiment developed by the Austrian mathematician Dorian Credé and launched in October 2011? Answers to these and many other questions are likely to lead to a more robust CRA model going forward.