Against this background, the Commission’s recent legislative proposals on Credit Rating Agencies, which the ECB broadly supports, is also discussed by this Committee. Credit ratings have a direct impact on the market functioning and the wider economy. A sound and robust framework must thus be created. This framework should be geared towards the following objectives: to reduce market volatility; to enhance the quality of rating process; and to restore market confidence. The two issues that are of particular importance are, first, the assurance of appropriate underlying methodologies and the transparency of ratings; and second, the reduction of hardwiring of ratings in legislation and market practices. Ratings simplify complex risk assessments. But they should only be one of several inputs for investors. In particular, they should be no substitute for financial institutions and other investors to carry out their own assessment. This is the main step towards avoiding mechanistic reliance on external credit ratings. Let me say a few words on how the ECB itself uses ratings. In practice, for the large majority of marketable securities (such as sovereign bonds) the Eurosystem Credit Assessment  1  Subject to approval by Finnish Parliament. BIS central bankers’ speeches  3  Framework mainly uses the ratings issued by eligible credit rating agencies. At the same time, the Eurosystem does not mechanically rely on these assessments, as it is aware of the limitations of methodologies.
I will list two important challenges: First is how we can share our resources and expertise to capitalize on the region’s growth. Second is how we can match regional demand with regional supply of savings and investment for the much-needed infrastructure development. 13. On the first challenge. Our resources will be better utilized if we regard our neighbors not as competitors but rather as partners in the regional production network. Here, we need to explore new opportunities to create industry clusters in the region by taking on our diverse comparative advantages and specialization. An existing example here is the cluster of industries relating to the garment industry, where one GMS country imports textile yarn from another country, manufactures it into apparels and then exports it to countries outside the region. 14. The second challenge concerns infrastructure financing. The projects that I mentioned earlier cannot be efficiently realized without proper funding mechanisms.