Important advances have been made in developing  10  See Borio and Lowe (2002), Detken and Smets (2004); and ECB (2007). BIS Review 85/2008  7  stress-testing techniques, and central banks have played a catalytic role in this progress.
11 However, also with regard to stress-testing techniques, we are faced with important limitations, related to unpredictable non-linearities or unexpected links that may surface during periods of stress. Until the existing limitations have been adequately addressed, our financial stability assessment will need to use an eclectic approach, building on a wide range of data sources, indicators and models.