Taking Responsibility for Global Credit Ratings - Speech on the Launch of Universal Credit Rating Group
By GUAN Jianzhong
25 June, 2013
Distinguished guests, experts and scholars, friends,
Ladies and gentlemen, Good afternoon!
First of all, please allow me to express my admiration for all those who have travelled a long distance to attend this later launch ceremony and later rating forum and to witness this historic event in the development of the credit economy.
The global credit crisis starting in 2008 has been changing the world; moreover, it has also triggered global criticism of the existing global credit rating system, highlighted the relationship between credit rating and the safe development of human society, promoted a consensus on global credit rating reform, and facilitated the construction of a new global credit rating system. This is a historical trend representing the common interests and will of human society.
After World War Ⅱ, the contradictions between capitalistic production and consumption stimulated a global credit revolution. Global credit revolution means: the existing credit mode based on real material wealth is changed, consumption needs are continuously expanded by means of credit that surpasses the ability of producing real material wealth, and thereby integrating credit relations into the whole process of social reproduction and making credit relations the economic base of modern society, which comprehensively influences economic and social activities of humanity.
Global credit revolution has three levels of epoch-making significance:
First, credit relations become the economic foundation of modern society;
Second, the new dynamic to affect the economic and social development is constructed. The global credit revolution results in two pairs of contradictions, which are production vs. credit, and credit vs. rating. The contradiction of production vs. credit is the driving force of economic pro-cyclicity, while the one of credit vs. rating is the force of economic counter-cyclicty.
Third, the decisive status of credit rating on the economic and social development of humanity is achieved. Highly socialized credit relations are built by rating as media, the rating quality decides the stability of credit relations, and the quality of credit relations affects the safe development of human society by its status of economic base.
When the entire world is connected by credit relations, there is an objective need for an agency that is able to take the responsibilities of providing global credit rating, and to ensure the safe development of global credit relations. When history proves that the existing global credit rating system has difficulty undertaking the responsibilities of global rating, reforming the existing rating system has become the common view and main stream idea of the international community. People have proactively made exploration and practice, hoping to establish a new global credit rating system to represent the common interests of human society and to undertake the responsibilities of global credit rating.
In response to the call of history, three rating agencies from China, the U.S. and Russia jointly released “Beijing Declaration” on October 24th 2012, making solemn commitment to the world that the three founders seriously advocate to establish a new global credit rating agency - Universal Credit Rating Group, to represent the human society’s common interest, to take the rating responsibilities of the world, and to avoid credit disaster triggered by wrong ratings. Therefore, three founders make serious and scientific design and plans for the future of UCRG with a strong sense of historical responsibilities out of the consideration of the fundamental interest of human society.
The nature of United Credit Rating Group (UCRG) is: a non-sovereign owned credit rating agency that is funded and established by private institutions from different countries that have no conflict of interests with credit rating, and that does not represent the interest of any country or any political or economic group. Its extensive representativeness is shown by the shareholding structure to ensure that every country takes part in UCRG with an equal footing, that no shareholder affects the nature of UCRG by controlling the number of equity, and that the future direction of the group is influenced by socially responsible and professional credit rating agencies. The corporate governance of UCRG is aimed at retaining the purity of its nature and accomplishment of its mission.
The mission of UCRG is: to promote the reform of the international credit rating system and construct a new international credit rating system, which reflects the laws governing the development of our credit-based economy and stands for the common interests of mankind; to develop new international credit rating criteria backed by new rating theory; to promote the establishment of an independent international supervision system for credit ratings; and to disseminate impartial rating information around the world.
The implementation pattern of UCRG’s mission is: promoting the establishment of world-wide dual-rating regime, which means to add a non-sovereign-owned rating system while maintaining the current sovereign-owned rating system to form a new international rating system where the sovereign-owned rating system co-exists with non-sovereign -owned rating system, mutually checking risks in credit ratings.
The blueprint for the development of UCRG is: in seven years from now on, i.e. by 2020, to basically build a global credit rating service system and to establish a complete and brand-new credit rating ideology, theory, and methodology system and global rating capability; and in another five-years’ time, i.e. by 2025, to develop the capability to participate in the rating business of every country and provide the world with credit risk information of every debt economy, undertaking the rating responsibility for the entire world.
Distinguished guests, experts and scholars, dear friends, UCRG arises at the historic moment of the on-going global credit crisis caused by the damage on global credit system inflicted by current global rating system that deviates from human society’s common interests. UCRG is the joint accomplishment of human exploration and practice, as well as the historic fruit that takes on global rating responsibility and humanity’s hope. Therefore, how should the world embrace such a new baby that is closely linked with humanity’s future development?
UCRG is the result of human’s attempt to reform global rating system and its success or not depends on whether the long-standing way of thinking on credit rating can be changed. It can be said that the global credit crisis has activated people’s frozen way of thinking on credit rating, which resulted in an international consensus to reform global rating system. However, there is a long way ahead of us in terms of how to realize the reform goals, because the existing perceptive methodology cannot guarantee the successful promotion of the reform. UCRG will persistently explore a new path that conforms to laws governing the development of credit economy and credit rating with the rest of the world in order to realize the common goal of reform.
UCRG is shared by humanity, it belongs to the entire world; it will thrive with the care and support of the international community, undertaking the responsibility of global credit ratings.
Thank you for your time.