In this article, the role of credit rating agencies (CRAs) during the 2010–11 EU sovereign debt crisis is assessed. It is concluded that rating agencies lag behind markets, that their business model is flawed, and that the lack of competition renders the big three CRAs with too strong a market position. The reliance on CRAs should be reduced by attaching less importance to them in prudential regulation and accounting standards. At the same time, more competition and transparency is needed to increase the quality of ratings. Finally, several policy options to change the ratings industry are discussed, including the creation of a network of small CRAs, delegation of sovereign debt ratings to the European Central Bank or the creation of a European rating agency.