There will be no upper limit to the total funds provided by the Bank to the financial institutions – the facility is unlimited. The duration of each loan will be one, two, or three years, as requested by financial institutions, and the loans will be able to be rolled over for up to four years.
In addition, many nonbanks are owned by bank holding companies, which may provide capital and liquidity guarantees to nonbank subsidiaries. Not surprisingly, the growth of the nonbank sector has tended to increase the complexity of the financial system. When banks provide loans directly to households and businesses, the chain of intermediation is relatively short and simple.