The Banco de España will assign more resources to complementing traditional supervision with the evaluation of the foregoing qualitative  BIS Review 38/2002  9  aspects, including corporate governance codes of practice, procedures and structures. The results of this evaluation will bear on our determination of each institution’s risk profile. Let me conclude this section with a reference to the greater demands made of supervisors by society for information and transparency. The obligation of professional secrecy imposed on supervises by national and international standards and the necessary discretion with which constructive banking supervision must be pursued are compatible with greater supervisory transparency. Indeed, that will allow for better knowledge, and thus control, of what are, at each moment in time, the priority goals of supervision, the problems it faces, the procedures to which it resorts, the means it assigns and the resulting measures drawing the foregoing elements together. In order to meet this - in my view - fully legitimate demand, and to foment knowledge and discussion on these matters, a Banking Supervision Report, which is at an advanced age of preparation, is shortly to be released. This will complement the new publication "Estabilidad Financiera" ("Financial Stability") launched in September last year. In our capacity as a Eurosystem central bank to which additional functions of great importance are entrusted, we continued to make progress in 2001 along the lines marked out for the future last year.
As a complement to a good corporate governance structure, credit institutions should be equipped with a sound risk culture. Such a culture should infuse the design and workings of the organisation and its management criteria, systems and methods; it should be founded on control procedures whose reliability has been duly tested; and its application should be overseen by departments possessing sufficient power and independence. All this should be substantiated by internal and external auditors and be highly visible to the market. Finally, I would like to stress the need for all types of financial institutions to apply due diligence. They should know their clients and systematically monitor their operations so they might prevent, and where necessary curb, not only money laundering and the funding of terrorism but also any other attempt to use the financial system for illegal or unethical purposes. Beyond the obligation all individuals and corporations have to observe and comply with the law, good practices in this area have an important supervisory dimension, as they play a decisive role when preventing or curbing such serious risks as those pertaining to reputation, legal risk, and so on. Despite the unquestionable importance of market discipline and good corporate governance, these are complements to banking supervision and, therefore, cannot replace it in respect of its essential task, namely "to promote the sound functioning and stability of the financial system", as stipulated in article 7 of our Law of Autonomy.