While in times of crisis, a stronger intermediation role by the central bank can be beneficial, in the long run it might crowd out market activity, and reduce incentives for peer monitoring. This could in turn increase risk-taking behaviour. These are of course side-effects of the proposed regulations which should not be neglected.
Not only the volume, but also the variation, of demand for central bank funding over time could be affected by the regulation. This might also play a role in determining the appropriate size of open market operations. It’s possible that on some days banks will seek financing from the central bank for regulatory purposes more than they do on other days.