1998 ), “ index number issues in the consumer price index ”, journal of economic perspectives, 12 ( 1 ) : 47 – 58 and von der lippe, p. ( 2007 ), index theory and price statistics, peter lang, frankfurt am main. 4 the direction of the bias for the aggregate index is less certain. broda, c. and weinstein, d. ( 2010 ), “ product creation and destruction : evidence and price implications ”, american economic review, 100 ( 3 ) : 691 – 723, find that failing to take into account product creation across the index creates an upward bias to traditional “ fixed good ” indices. 5 cavallo, a. and r. rigobon ( 2016 ), “ the billion prices project : using online prices for measurement and research ”, journal of economics perspectives, 30 ( 2 ) : 151 – 78. 6 gorodnichenko, y. and o. talavera ( 2014 ), “ price setting in online markets : basic facts, international comparisons and cross - border integration ”, nber working paper, no. 20406. 7 cavallo, a. ( 2017 ), “ are online and offline prices similar? evidence from large multi - channel retailers ”, american economic review, 107 ( 1 ) : 283 – 303, finds price levels are identical around 72 % of the time. 6 / 7 bis central bankers'speeches 8 see, e. g. lorenzani, d. and j. varga ( 2014 ), “ the economic impact of digital structural reforms ”, european commission economic papers, no. 529. 9 for a more detailed discussion of the impact of global value chains see ecb ( 2017 ), “ domestic and global drivers of inflation in the euro area ”, economic bulletin, issue 4 : 72 – 96. 10 ciccarelli, m. and b. mojon ( 2010 ), “ global inflation ”, the review of economics and statistics, 92 ( 3 ) : 524 – 535 find that a large proportion of domestic inflation rates in 22 oecd countries can be explained by global factors. parker, m. ( 2017 ), “ global inflation : the role of food, housing and energy prices ”, working paper series, no 2024, ecb, extends the analysis to a much larger sample of 223 countries and territories, showing the influence is particularly strong in food and energy prices. 11 for example, amiti,

a way that avoids significant disruption to the supply of critical financial services. nevertheless, failure is not costless and there is inherent uncertainty about whether a firm can fail without damaging the financial system and the supply of critical services. consequently, the pra will expect a given level of resilience to failure from all firms. there is another major public interest in the banking system, namely that by becoming too big to fail, the largest banks have developed an implicit, and in some cases explicit, dependence on public money. this is unwelcome, for the public, and for the banks, the former because of the unwanted cost, and the latter because of the intense scrutiny and oversight of the banks, which must be more intense as long as this state of affairs lasts. now, i recognise that we have a lot to do still on resolution planning to be comfortable about our objective of avoiding a no failure regime and thus solving the too big to fail problem. for large banks, we are making progress on resolution planning, and this world is different to five years ago, but we are not there yet by any means. i have a background in resolving banks, and i regard having the capacity to resolve failed large banks – including the largest – as the holy grail of resolution. unlike the legendary holy grail, i think there is a good reason to believe that the objective of being able to resolve large banks that fail can be within our grasp. i am very clear that when firms mess up, they should be allowed to fail, and by doing so they are putting at risk the money of their shareholders and if necessary after that those who provide debt funding according to levels of seniority. but i am also very clear that really achieving the objective of avoiding a no failure regime requires a fundamental change of mindset both inside firms, the authorities and in society more broadly. fear of failure is an important conditioner of behaviour in a financial regulator, and achieving a change on this front depends on establishing a wide acceptance of our approach that orderly failure which does not compromise our public policy objectives is an acceptable outcome. bis central bankers ’ speeches to be clear, we should be criticised where failure compromises those objectives and we could have taken steps to avoid it. but if failure is orderly, and does not compromise our public policy objectives, the responsibility should rest with the board and management for failing to serve the private interest of their shareholders and creditors. last on the theme of failure, having firms that are either too