in addressing financial stability risks associated with nonbank financial intermediation. the natural answer would be the regulator with authority to act. while this may well be the best answer from a policy perspective, it does raise some potential issues on its own. for example, if regulators with responsibility for one sector believe that the failure of regulators with responsibility for another sector to act on financial stability concerns is creating debilitating disadvantages for firms in the first sector, they might be tempted to relax regulation on their firms, even though they might agree that the best outcome would be to retain their existing regulations but have the other sector subject to some constraints as well. this seems to me not a bad description of what happened in banking for a good part of the three decades beginning in the mid - 1970s, when the banking agencies pursued a variety of deregulatory measures in part because they believed that the franchise of commercial banking was being eroded by various capital market activities that were not subject to appropriate prudential requirements. conclusion the financial stability board study to which i referred earlier notes that the growth of shadow banking in the united states in recent years has been relatively modest. with the regulated financial sector so much more resilient than in pre - crisis days, the financial system as a whole is obviously safer. moreover, much of the innovation occurring in lending and payments arenas today carries the promise of genuinely increased efficiency, and does not appear to be just an arbitrage against the stronger post - crisis regulatory regime. but if history is any guide, the grace period we are now experiencing will not last forever. new forms of intermediation may carry new risks, or older forms may acquire new risks as they expand and adapt to new circumstances. if we are to pursue a policy of case - by - case assessment that permits healthy forms of nonbank intermediation while protecting the financial system, financial regulators will need to develop effective and supple mechanisms for what i have termed prudential market regulation. see mary jo white ( 2014 ), “ enhancing risk monitoring and regulatory safeguards for the asset management industry, ” speech delivered at the new york times dealbook opportunities for tomorrow conference, new york, new york, december 11. see 80 fed. reg. 62274 ( october 15, 2015 ). bis central bankers ’ speeches

which should translate into a rebound in labor force participation as more parents overseeing virtual education and child care are able to increase hours or return to the workforce. the biggest risk to the outlook continues to be the course of the pandemic. i see good reasons to be optimistic. vaccinations are proceeding at a rapid pace, and this progress is supporting decisions by state and local leaders to relax economic restrictions. most importantly, deaths related to the virus have continued to fall steadily and are at roughly the rate as in early october of last year. i remain hopeful that progress in the economic recovery can stay ahead of new challenges that might emerge, like the spread of new virus variants. that would allow states and localities to continue easing economic and social distancing restrictions and encourage consumers and businesses to return to normal activities. i understand that in colorado, for example, officials are considering lifting social - distancing restrictions on individuals and businesses. i would be interested to hear from this group about how businesses in colorado have been faring and whether they have seen an improvement in demand as the pandemic conditions are easing. while i am optimistic about the ongoing recovery, one lesson of the past year is the significant degree of uncertainty about the course of the virus and its effect on the economy. we experienced periods of considerable progress last year, but we saw some of that progress overtaken by waves of the infection late in the year. likewise, economic growth rebounded much more quickly than many had expected, but then slowed late in 2020 before regaining speed following the availability of the vaccine. even with recent encouraging reports on food services, activity in the travel, leisure, and hospitality sectors is still severely compromised, but is showing glimmers of activity. it may be some time before we know whether old habits will resume or new habits have developed that may define a post - pandemic new normal. as i noted in a recent speech, i am particularly concerned about the longer - term effect on small businesses, many of which have held on with government aid and loan forbearance programs that will soon expire. 1 it will be several months before we know the final count of permanent small business closures from 2020, but it could be more than we expect. i will now turn to how the federal reserve is proceeding in light of the strong signals of momentum building in the economy. the economic recovery is not yet complete, and the uncertain course of the pandemic still presents risks in the near term