Repo
BankingDefinition
Repurchase agreement. Short-term borrowing where a securities holder sells securities to a buyer with an agreement to buy them back at a slightly higher price the next day. Effectively a collateralized overnight loan. The interest rate is the "repo rate."
The repo market is the plumbing of the financial system — banks, dealers, and money funds use it to borrow ~$5T overnight. Disruptions (Sept 2019 spike, March 2020) signal serious liquidity stress and force Fed intervention.
The repo market is the plumbing of the financial system — banks, dealers, and money funds use it to borrow ~$5T overnight. Disruptions (Sept 2019 spike, March 2020) signal serious liquidity stress and force Fed intervention.