Credit rating agencies have yet to overcome underlying conflicts of interest that have contributed to the current crisis and their approach was a reason for concern, an ECB Executive Board member said.

I am concerned about one development and that's the pro-cyclical attitude of rating agencies, Juergen Stark told German newspaper Stuttgarter Zeitung in an interview published on Friday.

That means that before the crisis they obviously published ratings that were too favorable, which additionally aggravated the situation, he said.

If, as was the case with Ireland, a rating agency cuts a country by five notches, then it has been asleep in the past, Stark said, adding that rating agencies' conflicts of interest had not really been resolved.

The sector is dominated globally by three agencies, Standard & Poor's , Moody's and Fitch Ratings and was badly tarnished during the financial crisis after highly rated securitized products became untradable, helping to trigger fire sales and bank rescues.

Stark sees better conditions emerging on money markets.

We are, by now, seeing a significant improvement in that market. There is more trust among banks again, Stark said.

Banks in the euro zone have been reluctant to lend to one another, worried about their exposure to shaky sovereign debt, leaving the ECB as the only source of cash for some.

(Reporting by Nicola Leske; Editing by Derek Caney)