Rating agencies from China, Russia and the United States officially launched a new credit rating company here on Tuesday to challenge the current industry leaders and promote reforms in the global rating system.
The new joint venture, the Universal Credit Rating Group (UCRG), aims at constructing a "dual rating" system in which a new international credit rating system co-exists with the current one.
Founding members of the new UCRG are China-based Dagong Global Credit Rating Co. Ltd, Egan-Jones Ratings Co of the United States, and Russia's RusRating JSC.
Currently, the global credit rating system has been dominated by the western-based "Big Three", namely Standard and Poor's, Moody's and Fitch Ratings, which have been criticized since the 2008 global financial crisis.
"Credit ratings are indispensable in global economic operation, and it is obvious that the current rating system needs reforming and introducing new thinking," said Guan Jianzhong, chairman of the Hong Kong-based agency.
The joint venture aims to establish its new global credit rating service system and methodologies by 2020, and by 2025 to provide credit risk information to all the world's economies.
"Introducing a fundamentally different way of providing global credit rating is a daunting challenge," said Richard Hainsworth, CEO of the UCRG.
"Our goal is not to replace the global rating agencies. We aim to offer another framework that brings in new geographic perspectives when evaluating the creditworthiness of corporate and sovereign debt," he said.
The UCRG has established its global operating headquarters in Hong Kong, and the three founding members of the group took on the role of chairman, CEO and director.
Robert Mundell, an economist and a 1999 Nobel Prize winner, said Hong Kong is "a good idea" for the rating firm to start before it goes international.
There is still a long time before the firm could move up and face the industry giants, but it has comparative advantages in the Chinese mainland, China's Hong Kong, as well as South East Asia, said Mundell, speaking at the UCRG's launching ceremony.
"The UCRG should be able to launch branches in both U.S. and Europe, increase its credibility and gradually have an impact on global rating," he said.