Credit rating agencies need tighter supervision because their activities have a strong impact on funding costs for debt issuers and can affect financial stability, the International Monetary Fund said.
The IMF released some analytical chapters from its World Economic Outlook, which will be issued next week before the semi-annual meetings of the lender and its sister institution, the World Bank.
Policymakers should continue their efforts to reduce their own reliance on credit ratings, and wherever possible remove or replace references to ratings in laws and regulations, and in central bank collateral policies, the IMF said.
Credit ratings agencies came under scrutiny because of sharp downgrades they applied to structured credit products after the sub-prime mortgage crisis, and more recent downgrades they imposed because of weakened sovereign balance sheets.
The IMF notes that while there are more than 70 ratings agencies listed worldwide, only three really count in the sense of being global in scope - Fitch Ratings, Moody's and Standard & Poor's.
It says regulators should tighten oversight of the agencies when their ratings are used in regulations, especially to ensure their methods are transparent and that no conflicts of interest exist.
In a second chapter on systemic liquidity risks, the IMF noted that during the 2007-2009 financial crisis many financial institutions simply failed to take into account the possibility of a sudden loss of access to secured financing and therefore made themselves vulnerable.
It urged that regulators require better internal controls on collateral valuation and margining policies, more transparency about counterparties and other measures to make sure that clearing and collateral management is tightened up.