Forecasting ability fails to justify rating agencies’ power grab
A review of rating agencies' performance in the aftermath of the Great Depression - a period in which agencies took up the central role in supervision that they still maintain today - posits that their forecasting abilities fail to explain their growing power.
The paper, published by the Bank for International Settlements in late December, finds that rating agencies' forecasts in assessing the riskiness of sovereign debt during the interwar period were no superior to those embedded in available
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