One possibility would be to confine such borrowing to circumstances in which the Federal Reserve judges that the stability of the financial system is at risk – as we did in March. Another would be to grant broker-dealers the same sort of regular access enjoyed by commercial banks. The question has implications for the appropriate regulatory regime for broker-dealers and their parent companies.
As I've already noted, the existence of liquidity facilities at the central bank can undermine normal incentives for maintaining liquidity buffers, and the more extensive the access, the greater the degree to which market discipline will be loosened and prudential regulation will need to be tightened.