BBC News Online has this step-by-step guide to the fraud, according to what is known so far.

Step One:
A currency trader executes a large number of foreign exchange transactions.

Allied Irish has confirmed these deals involved buying and selling Japanese yen and US dollars.

These were both "spot" contracts, involving on-the-spot deals and "forwards", which are agreements to purchase foreign exchange at a specified date in the future at a specified exchange rate.

Step Two:
The trader appears to offset the risk involved in these transactions by taking out "options" contracts.

These give the holder the option to buy or sell a specified quantity of a commodity, currency or security - in this case a currency - at a specified date at a specified price.

Taking out options is routine among currency traders. The contracts are used to make a bet in the opposite direction, thereby providing "insurance" in case markets move in a way not anticipated in earlier transactions.

Step Three:
Most observers assume, though it has yet to be categorically stated by AIB, that the original forex deals proved bad, causing big losses.

The most likely scenario is that the trader built up big bets that the yen would strengthen against the dollar. Instead, it has weakened considerably over the past 12 months - the period in question.

Step Four:
The bank discovers that the losses have not been offset by profits from the options deals.

What has happened is that the purchase orders have been entered into the bank's system "artificially". That is, it was made to appear as if options contracts had been bought when, in fact, they hadn't.

AIB is describing them as "fictitious".

This act or acts appears to be the fraud at the heart of the case.

What has to be clarified:

It remains unclear why the options contracts were not bought.

One theory is that the fraud was a retrospective attempt to conceal losses that occured on transactions in the past. This still wouldn't explain why the options were not bought.

Another theory is that an individual or individuals skimmed the fees that appeared to have been paid for options, instead taking them.

Open questions:

A myriad of other questions remain, chief among them:

• Was the fraud a one-person operation or did it involve others inside or outside the bank?
• Did any individual or individuals profit from the fraud or was it "just" an attempt to conceal losses - what AIB describes as a "right royal mess"?
• Finally and most importantly, why did the bank's internal controls fail to spot the fraud? In light of the warning given by the collapse of British bank Barings in 1995, it is this question which is giving most concern to banks and investors around the world.