However, it subsequently became clear that the rating agencies had not themselves understood the extent of the risks associated with complex structured instruments, particularly those related to subprime mortgages. Once those risks were realized, the ratings of many of these securities were downgraded sharply, with investors taking very large and unexpected losses. Addressing these weaknesses will require action on several fronts.
Having said this, I do not deny that the implementation of the rules and procedures of the existing fiscal framework could be improved. And in some respects improvements have been or are in the process of being made. A good example is the assessment of the long-term sustainability of public finances.