Young people, hardest hit by the global economic downturn, are speaking out and demanding change. Coming of age in the Great Recession, the world’s youth face an uncertain future, with lengthening job lines, diminished opportunities, and bleaker prospects that are taking a heavy emotional toll. The March 2012 issue of Finance & Development magazine looks at the challenges facing young people today.
One of the earliest take aways from the global financial crisis was the importance of access to information for effectively functioning financial markets. And, in that regard, credit ratings can serve an incredibly useful role in global and domestic financial markets. But, in practice, credit ratings have inadvertently contributed to financial instability. To be fair, the problem does not lie entirely with the ratings themselves, but with overreliance on ratings by both borrowers and creditors. In one of the background papers for the Fall 2010 Global Financial Stability Report that John Kiff prepared with IMF colleagues, they recommend that regulators should reduce their reliance on credit ratings. Markets need to end their addiction to credit ratings.