As top film scriptwriters know, filmgoers are happiest when they can predict a little bit of what’s going to happen. Music composers also know this. The more unpredictable a film or a musical composition is, the more unsatisfied viewers and listeners are. In this debt crisis, in addition to the responsibility of the countries subjected to market mistrust, the lack of coordination among European Union leaders has also played a key role. In the public eye, the latter have aired substantial differences and have sometimes done so at the worst possible time in the crisis, thereby contributing to compounding the problems. I recall a journalist interviewing an analyst in a US TV programme some weeks back. The analysts set about discussing how Europe’s sovereign debt problems were the main source of instability at present worldwide. The journalists asked him how it was possible that, among the markets’ reasons for nervousness, he had not even mentioned the North Korean bombing incident the previous day. And the analyst replied: “Look, markets like predictable. And the North Korean government is much more predictable than European politicians”. 4  BIS Review 171/2010  What I have said about European Union institutions can also be extended to institutions within individual countries, where it is not only important what the central government says or does, but also what the regional governments, the opposition and, generally, all relevant economic agents do or say. And that’s something else we’ve learned about markets: they see us from afar and don’t distinguish what we distinguish within.

Moreover, in real terms, according to third quarter’s data, net exports deficit narrowed and contributed positively to aggregate demand. Annualised contraction of net exports deficit is assessed to be resulting from imports of goods and services decline by about 4.2% in real terms and exports upsurge by about 8.6%. Monetary indicators were in line with developments in the economy’s real sector. Our analysis and assessments suggest that higher monetary supply is in accordance with economic agents’ demand for real money, while monetary inflationary pressures in the economy are contained. Growth of M3 aggregate was slower in the second half of 2011, influenced by lower money creation in foreign currencies. During July–October, annual average growth of monetary assets in the economy was 10.4%. Contribution of private sector’s demand for loans remained unchanged. At the end of November, its annualised growth was 10.9%. Crediting remains under the influence of low demand for loans and more prudent lending policies by banks. Economic agents’ behaviour continues to be conditioned by uncertainty for the future, which, in turn, conditions spending and investments in the economy. On the other hand, credit supply is tight, as lending standards performance shows. Financial markets during the second half of 2011 were calm and reflected relatively downward premiums on liquidity risk and inflation. Successive key rate cuts were swiftly reflected in the interbank market. In the primary market, government security yields dropped, reflecting the key interest rate cut as well as the low demand of the public sector for loans.