Ratings agencies rate financial products, companies, banks and even countries. We need to change the way they are run, Annette Heuser says in this week’s featured TED talk.
When a ratings agency rates a country, it is rating that country’s ability and willingness to repay its debt. The very nature of this process, Heuser argues, means these decisions affect everyone.
Three companies, Standard & Poor’s, Moody’s and Fitch, currently dominate the ratings market. Heuser, who is from the Bertelsmann Foundation, says their monopoly stifles competition and means there is no incentive to improve products. She adds that the whole process lacks transparency, which needs to change.
The answer? Heuser and the Bertelsmann Foundation have come up with a not-for-profit ratings agency that rates countries, called INCRA. She says, “For way too long, we have left the big financial players on their own. It’s time to give them some company.”
To watch this video on the TED website, click here.