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The FSB has drawn up principles to reduce reliance on CRA ratings in standards, laws and regulations. Reducing reliance in this way will reduce the financial stability-threatening herding and cliff effects that currently arise from CRA rating thresholds being hard-wired into laws, regulations and market practices. The principles aim to catalyse a significant change in existing practices, to end mechanistic reliance by market participants and establish stronger internal credit risk assessment practices instead. They set out broad objectives, for standard setters and regulators to follow up by defining the more specific actions that will be needed to implement the changes over time.
International Endorsement : The Principles for Reducing Reliance on CRA Ratings were endorsed by G20 Leaders in November 2010 (Seoul Summit).