Degrade

My first impression was I should support a grading system so that we could give some recognition to the good students.

But, in no time, I hesitated.

The reason is simple. As soon as I tried to reflect what I observed over the years, all grading system will evolve into a degrading system. When the grade is given by examiner or supervisor's subjective scoring, there is always a tendency to give a high grade. Although the original objective of having a grade is to give some incentive to make good students better, it turns out examiners and supervisors use it as the opportunity to show they are nice people.

You may argue supervisors may have a conflict of interest and would try to give a higher grade and make their students appear good. Why should examiners do so?

Alas, as Jimmy Jiang said, your question is too simple and probably naive. Examiners, be they internal or external, have their own students, and supervisors can turn into examiners!

I shall not elaborate further.