Measures should be taken to boost transparency on how credit rating agencies rate sovereign debt, European commissioner for internal market and services Michel Barnier said today.

"Financial institutions are too much reliant on ratings, which should be reduced", and rating agencies should be obliged to boost transparency on how they come up with sovereign debt ratings, Mr Barnier said in a speech in Tokyo. He did not elaborate on what specific measures he had in mind.

Sovereign rating downgrades have jolted markets as advanced economies struggle with huge debt piles left from fighting the global financial crisis after the collapse of Lehman Brothers in 2008, and battle the long-standing debt crisis in Europe.

European leaders have expressed displeasure over rating downgrades, including Standard and Poor's rating cuts for nine euro zone nations last week.

Mr Barnier had previously suggested the credit rating of a country under a programme of financial assistance could be suspended, although he later said the commission would postpone such a proposal after drawing criticism from investors and rating agencies.

The former French foreign minister also said the level of public debt in Europe was high but must be put into perspective, stressing that it was not excessively high compared with that of Japan and the United States.

"But we are suffering from a loss of confidence in financial markets," he said, adding that Europe is and will take necessary measures not just for immediate crisis response but for structural reform.

Reuters