Furthermore, the Spanish State is committed to ending next year with a deficit of 6%, more than 5 percentage points lower than in 2009. 4  BIS Review 161/2010  As for the quality of bank balance sheets, it is well known that non-performing loans have increased in recent years, and also that lending to the construction and real estate development sector was excessive. However, the stress tests have shown not only that banks have the capacity to absorb potential losses arising from extreme and highly unlikely scenarios, but also that most balance sheets comprise healthy assets in the various consumption and investment segments of the Spanish economy. Despite these fundamental differences, the climate of uncertainty makes it advisable to reaffirm the adjustments promised by the authorities and to demonstrate to the international community that each major goal will be scrupulously met. I would like to point out four actions which I consider essential within this framework: –  First, it is necessary to continue to restructure bank assets and full information should be provided in this connection. In the last three years, credit institutions have made notable efforts to recognise the impairment of assets on their balance sheets. This impairment recognition, effected through profit and loss accounts, amounts to more than € billion. To this figure should be added the possible use of a further € billion built up as a “general provision” since the introduction of countercyclical provisioning in 2000, and another € billion provisioned with a charge to equity in the mergers.

As part of the efforts to improve the standard of pen-testing in Malaysia, Bank Negara Malaysia facilitated the formation of a task force last October, to set up a Malaysia chapter of the UK-based Council of Registered Ethical Security Testers or CREST, which will serve as a certification body for ethical hackers. We believe that this is a good platform to grow domestic talent in this area and promote international best practices in penetration testing. c. The Bank has also launched the Operational Risk Integrated Online Network or commonly known in the industry as the ORION system, to enhance the standard of operational risk 2/5  BIS central bankers' speeches  management in the financial sector. ORION is a risk surveillance system that consolidates information on operational risk incidences, including cyber-attacks. The system will strengthen the Bank’s ability to perform system-wide monitoring and early detection of developing trends in cyber-attacks and frauds within the financial sector. Moving forward, Bank Negara Malaysia is looking to address identified gaps in technology risk management practices within the financial sector. As part of this effort, the Bank is in the midst of conducting a comprehensive review of existing technology risk guidelines, including enhancing the expectations for the board and senior management to play a more active role in managing technology risk, and enhancing the resilience of IT infrastructures such as data centres. In today’s world where there is increasing uncertainty of what the future may hold, it is no longer possible for risk managers to rely solely on historical trends.