Special Coverage

Innovating One-Belt,N One-Road Cross- Border Financing Tools and Building a New International Rating System: A Statement Proposed by the UCRG International Advisory Council

Aug 10, 2016 11:15 AM Author Font:TTT

On the morning of July 19th, 2016, the 2016 World Credit Rating Forum was held in Beijing. At the meeting, Universal Credit Rating Group (UCRG), one of the Forum’s organizers, proposed a statement to integrate credit rating into the world’s economic governance system.

In the statement to integrate credit rating into the world’s economic governance system, the International Advisory Council (IAC) of UCRG stated that the world has been facing major economic challenges threatening long-term stability over the recent period. In Europe, the UK’s referendum on its EU membership has disturbed financial markets and highlighted the growing distrust towards economic and political institutions. China, at the same time, is experiencing slowdown and gradual reforms. In South America, many markets are going through sharp recession. The drop in oil prices has at the same time created a major strain for oil producing countries, in particular in the Middle East, weighing on their banking and credit system. In the Eurozone as well as in the USA, quantitative easing lacks the ability to stimulate real economy and negative interest rates are still inhibiting growth. In all of these contexts, it seems that the lessons of the last global crisis have not been taken. Since 2008, global debts have risen much faster than growth. The main engines of global GDP are weakened by sluggish investments, overcapacity and low demand. Against such a background, we have to take all possible measures to avoid the next global credit crisis.

In press interviews at the IAC Annual Meeting, Mr. Guan Jianzhong, Chairman of UCRG, reminded us that credit rating agencies play a decisive role in managing financial risks and avoiding related crises. He outlined two key views: 1) innovative financing modes and tools need to be adopted to meet the cross-border capital connectivity of One-Belt, One-Road; and 2) UCRG should serve as the rating agency to meet the strategic demands of Belt and Road and the construction of a new international rating system.

Mr. Dominique de Villepin, Former Prime Minister of France and Chairman of the International Advisory Council of UCRG, added that in less than two months, the eleventh G-20 Summit will occur in China for the first time, in the city of Hangzhou, and offers the chance to deal with this fundamental issues. To prevent a second global credit crisis, he believes that the following measures need to be taken: 1) The global awareness about credit risk must be strongly improved. In this respect, reforming global credit rating is key for better risk assessment; 2) As members of the International Advisory Council of Universal Credit Rating Group (UCRG), we firmly support initiatives devoted to promote best practices exchange and new methodology on worldwide scale. What we need is setting up a more balanced system breaking with Western hegemony, a system of credit rating more reliable, more independent and more transparent, in which Asia plays a major role; and 3) Restoring confidence is a priority. Trust towards credit rating agencies has been eroded by a series of recent crises as well as trust between creditors and debtors. Corporate, private and sovereign debts have exploded over the previous years.

At Dagong Group’s initiative, UCRG was officially launched in Hong Kong in June 2013. Its mission is to build a new non-sovereign international rating system that represents the common interests of human society and is capable of undertaking the responsibility of rating for the world.

Mr. Shaukat Aziz, Former Prime Minister of Pakistan and Mr. Igor Ivanov, Former Minister of Foreign Affairs of the Russian Federation, both of whom are members of the IAC of UCRG,N also made presentations at the Annual Meeting and the press availability.