Lessons from the financial crisis: new rules for central banks and credit rating agencies?

The US mortgage crisis, which has spiralled into what is now seen as the most serious global financial upheaval since the 1930s, has provoked criticism of the Federal Reserve for its failure to recognise, and act on, the real estate bubble. Credit rating agencies, too, have come under heavy fire for having actively contributed to the present crisis. Should central banks pay special attention to, and try to influence, the development of asset prices? Is statutory regulation of rating agencies required? If so, what form should it take? Is the European Commission’s recently issued draft up to its purpose?