The European Union (EU) unveiled Tuesday proposals to toughen regulations on credit rating agencies to prevent them from "increasing market volatility further."
"Ratings have a direct impact on the markets and the wider economy and thus on the prosperity of European citizens. We can't let ratings increase market volatility further," said Michel Barnier, European Commissioner for Internal Market and Services.
Speaking at a press conference following a EU meeting, Barnier said the proposals were designed to "reduce the over-reliance on ratings and improve the quality of the rating process."
"Credit rating agencies should follow stricter rules, be more transparent about their ratings and be held accountable for their mistakes. I also want to see increased competition in this sector," he told reporters.
The reform package came as the most aggressive effort by the EU to rein in an industry that some European leaders have blamed for exacerbating the sovereign debt crisis with "subjective" rating decisions.