Use of OECD ratings in US market risk proposals questioned
Country risk classifications "are not sovereign ratings" says OECD. US regulators last month proposed using them as an alternative to external credit ratings
US regulators might have backed the wrong horse in their efforts to find a replacement for sovereign credit ratings in trading book capital rules, a Dodd-Frank Act requirement. The alternative they picked in their December 7 proposals – the country risk classifications (CRCs) produced by the Organisation for Economic Co-operation and Development (OECD) – is a measure of currency convertibility risk, rather than credit risk.
"The CRCs are meant to reflect transfer and convertibility risk and
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