The Financial Reputation of States

The logic of reputation is at the core of the social practice of finance. From this perspective, credit rating agencies are one of the most fundamental players on the global reputational market of both corporations and states that strive to enter the debt market. This article studies the role of credit rating agencies that produce indicators reflecting the financial reputation of states. Sovereign ratings are indicators of the creditworthiness of states that measure both intentions and capacities of these states to honor their debts. Ratings as a source of knowledge have mainly three functions. They can fulfill a role of surveillance. They provide a certain amount of informational value. They are tools of accreditation. From a historical perspective, this article will compare these different functions and underline, in the current financial and political context, the role of ratings as agents of accreditation. To a certain extent, this process favors stability in international finance and international politics and tends to slow down process of change. Eventually, the effects of reputation are circumscribed and less dramatic than what appear in the most common accounts of financial ratings.