* Finance ministers want ECB to rate sovereign debt-source
* Would eliminate dependency from rating agencies
* ECB's Nowotny said central banks could do it better
(Adds details, background, reaction)
FRANKFURT, March 3 European Union finance
ministers are pushing the European Central Bank to develop its
own rating system for euro zone countries, German business daily
Handelsblatt reported on Wednesday, citing EU finance ministry
The paper quoted one official saying the plan would free the
euro zone from its dependency on international rating agencies
such as Standard & Poors, Moody's and Fitch.
"The agencies have been completely wrong in the case of
Lehman. Who can be sure that they won't be wrong again," said
the source, described as being from the Ecofin group of finance
European Commission spokesman Amadeu Altafaj said he had no
comment at this stage on the Handelsblatt story.
The ECB also declined to comment on the report, a day after
ECB Governing Council member Ewald Nowotny criticised the power
wielded by ratings agencies and said central banks could better
judge a country's economic performance.
Greece's recent debt troubles have highlighted problems in
the system under which the ECB accepts bonds as security for
loans based on the judgment of major ratings agencies --
currently at least one agency must rate bonds BBB-, but the
threshold is due to go back to A- at year end.
Fitch and S&P have downgraded Greece into 'B' territory and
should Moody's follow suit, banks would no longer be able to
exchange Greek government debt for cash in ECB refinancing
operations from January 2011.
Nowotny said on Tuesday Europeans had never been able to
agree on setting up a local alternative to the big ratings
agencies, but it would be good to escape from dependence on
"The fate of Greece, and if you are going to be more
dramatic, the fate of Europe, depends on the judgement of one
rating agency. That is an unacceptable situation," he said,
adding that sanctions from ratings agencies were "bigger than
"The problem is that they are like a black box. A central
bank can better judge the economic developments of a country
than three people sitting in an office in New York."
Nowotny heads the Austrian central bank, one of four
national central banks who already prepare internal assessments
of some debt submitted as collateral.
THREAT TO INDEPENDENCE?
Analysts said such a move would open the door to extreme
political pressure on the ECB, although it would be very
convenient to resolve a potential stand-off over Greek debt.
"The ECB has said it would not change the rules for one
country, but it can change the rules for all countries at the
same time," Nomura economist Laurent Bilke said.
"The flipside of this would be that governments are going to
be very interested in the position of the ECB is. There is one
element I am not very comfortable with, and that is that the ECB
is an authority controlling what national authorities are doing
and whether they comply with European rules."
"I think independence should work both directions -- it
would not like the governments to assess what it does in terms
of monetary policy and to deliver price stability."
The ECB already accepts ratings prepared by national central
banks' in-house credit assessment systems in some circumstances
where no external rating is available, for example for
non-traded assets like packages of loans.
The German, French, Austrian and Spanish central banks run
such systems, the ECB's collateral guidelines show.
(Reporting by Marc Jones, Sakari Suoninen and Krista Hughes;
editing by Patrick Graham)