When the Federal Reserve makes a repurchase agreement with a government securities dealer, it buys a security for immediate delivery with an agreement to sell the security back at the same price by a specific date (usually within 15 days) and receives interest at a specific rate. This arrangement allows the Federal Reserve to inject reserves into the banking system on a temporary basis to meet a temporary need and to withdraw these reserves as soon as that need has passed.
An investment agreement involving the purchase of a security and a simultaneous agreement (generally with a bank or broker dealer) to repurchase that security at a specified price and date. Repurchase agreements are used as a way to earn income on idle cash.
When the central bank buys or sells a security to a government securities dealer with the promise to sell it back or repurchase it a short while later. This act has the effect of injecting or removing reserves from the banking system in order to meet central bank strategies for implementing monetary policy.
A transaction, where a security is bought at one price, with a promise to sell that same security back to the seller at a higher price. The repurchase interval is relatively short.
An agreement to purchase securities from an entity for a specified amount of cash and to resell the securities to the entity at an agreed upon price and time. Repos are widely used as a money market instrument.
See Repurchase Agreement.
A method of borrowing by using a security as collateral for a loan. The interest rate and term of the loan are agreed upon in advance, an upon repayment of the loan the security Is returned to the owner. The borrower retains possession of the security and continues to receive any interest payments during the term of the agreement. Also known as a repo. In reference to Federal Reserve actions, a means of temporarily adding to reserves. The fed buys securities under a contract to sell them back at an agreed price and date. (General RP's mature within 1-7 days, the maximum term being 15 days.) Dealers may repurchase prior to the maturity of the RP if they wish.
Short-term loans - normally for less than two weeks and frequently for one day - arranged by selling securities to an investor with an agreement to repurchase them at a fixed price on a fixed date.
Generally, overnight loans secured by U.S. Treasury securities.
An agreement between a seller and a buyer, in which the seller agrees to buy back the security at a later date.
An agreement by which, for example, the Federal Reserve purchases a security for immediate delivery and receives interest at a specific rate from a government securities dealer, with an agreement to sell the security back at the same price by a specific date (usually within 15 days). This arrangement allows the Federal Reserve to inject reserves into the banking system on a temporary basis to meet a temporary need and to withdraw these reserves as soon as that need has passed.