Oligopolies are rarely attractive. Add in political sensitivities, and it is no surprise that European regulators are eyeing the credit rating agencies. According to the influential Bruegel think-tank, Moody’s, S&P and Fitch account for all but 3 per cent of credit ratings outstanding.

But in their desire for reform, European policymakers have produced draft proposals ranging from counter-productive to downright unworkable. Take rotation. This measure would bar a CRA from issuing (paid-for) ratings on an issuer or its debt instruments for more than three years, or for more than 10 consecutive debt instruments. Once stood down, it could not handle the same issuer for another four years. But most banks already use dual ratings (so two agencies). At times of high issuance, they could easily get through 10 debt instruments in a year. So, with three players to choose from, the permutations would simply be impossible. New CRAs are not going to spring up – nor niche ones expand – overnight.

Giving the European Securities and Markets Authority powers to ban new sovereign ratings that could be used for regulatory capital purposes when bail-outs are being discussed is even more troubling. Brussels insists these would be deployed temporarily and selectively, such as when there was “an imminent threat to financial stability”. But the difficulty of making that call aside, it is hard to see what would be achieved. As Bruegel notes, it is developments such as the Deauville declaration or the size of the Greek deficits which have driven investor sentiment. Eurozone downgrades have had limited market impact, if any.