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Financial stability and financial risks

The Use of Ratings in the European Capital Markets

Until now professional ratings of bond issues, etc. have been more widely used in the USA than in Europe. The size and diversity of the US capital market mean that in the USA ratings naturally play an important role in the assessment of the credit risk associated with placement of funds in the bonds of a certain issuer. The general integration of the European capital markets after the establishment of the Economic and Monetary Union (EMU) may entail that ratings acquire a more important role in Europe. This article describes several factors of significance to this development.