##fund. this development, together with the results of a comprehensive cash flow projection for the entire portfolio, confirm the snb in its view that it has unimpaired prospects of receiving repayment of the loan in full. however, these calculations are bedevilled by great uncertainty – and the risk to the snb remains substantial. as the stabfund values much of its portfolio at amortised cost, the recovery in the financial markets has only modest effects on its financial reporting. the cumulated loss at the end of the third quarter ( since 1 october 2008 ) was usd 4. 4 billion. equity capital reported thus remains negative, though this loss was entirely covered at the time by the secondary loss protection – the warrant for the purchase of 100 million ubs shares at nominal value. by the end of the stabfund ’ s first financial year it will have largely completed the build - up of its operating activities. in the last few months, following the asset transfer phase between december 2008 and april 2009, the asset management process was set up, risk monitoring and financial reporting expanded, and an internal control system and operational risk management introduced. these processes will be further improved next year, with asset management taking on a key role. while the intrinsic values of the assets represent a key element in managing the portfolio, the process must not be merely mechanistic. now that it has been possible to sell off some of the more liquid assets over the last few months, attention will focus more closely on two tasks : minimising the larger concentration risks, and ensuring that – as the portfolio is disposed of – the best possible equilibrium is maintained in various respects, including the degree of liquidity of its holdings. broadening participation in the swiss franc repo market the unsecured money market collapsed when the financial crisis broke out in august 2007 and it has not properly recovered to this day. the repo market, conversely, in which money is lent against securities, has emerged as a crisis - resistant mainstay of the financial system. the efficient swiss repo system – through which the snb conducts its normal monetary policy transactions – has proved to be especially robust. the snb depends on a liquid swiss franc money market for the efficient implementation of its monetary policy. this is why, in addition to domestic banks, foreign banks were admitted to the swiss franc repo market as long as ten years ago. from 2010, the snb will open the repo market to

in recruitment difficulties. nonetheless, while pointing to some easing in recent months, these indicators suggest the labour market remains tight in an absolute sense relative to historical experience. in turn, this is consistent with continued strength in uk wage growth. annual private sector regular pay growth was 7. 3 % in the latest report, 0. 1pp higher than expected in the mpr, even if the momentum of wage growth may now be slowing. turning to yesterday ’ s cpi data, inflation fell to 10. 1 % in january, from 10. 5 % in december. on the month, this mainly owed to an easing in services and fuel price inflation, although developments in historically very volatile components such as airfares counted for a large part of the former. both the march and may mpc meetings represent points at which the committee can again assess the implications of incoming data for the monetary policy stance, with the latter having the advantage of an updated comprehensive assessment in the form of the mpc forecasts. as ever, i will come to my own conclusions about bank rate on those occasions on the basis of my assessment of the data flow, with my decision focused on meeting the mpc ’ s price stability mandate through achieving the 2 % inflation target on a sustained and lasting basis. before opening up to questions, i wanted to conclude with a few comments on the title of my remarks this evening : ‘ inflation is a wicked problem ’. the challenges posed by the cost - of - living squeeze are all too real for many households and businesses. this is especially true for those households towards the lower end of the income distribution, which spend a greater share of their income on food and energy – items for which prices have risen the most. addressing these challenges – and containing the difficult implications of the cost - of - living squeeze – motivates the mpc ’ s actions to return inflation to target. but in talking about ‘ wickedness ’ this evening, i am referring to a different dimension of the inflation problem. this draws on the social science literature, where a ‘ wicked problem ’ is defined as one that – because of the complex web of interdependencies within which it is embedded – is resistant to resolution. [ 7 ] in particular, the effort to solve one aspect of a ‘ wicked problem ’ may reveal or create other related problems across other aspects. this literature describes a tendency to address ‘ wicked problems ’ by converting them into socalled ‘ tame problems ’ or ‘ puzzles ’. [ 8