Repurchase Agreement (Repo)
An agreement in which money is lent against securities with a change in beneficial ownership, on the basis that they will be bought back at the end of the day or on a later date. This process may be automated.
Repos are typically used to raise short-term capital to meet the liquidity needs of a holder of government securities.
Repos are usually used to ensure liquidity during the day for financial institutions that are participants in an RTGS.
They are also a common tool of central bank open market operations.
This is a series of posts with definitions for the jargon used in #banking, #fintech and #payments.
Too many people use some terms without understanding them beyond the definition.
Too many “experts” use the terms but they never had experience with the actual implementation of anything in #banking, #fintech and #payments.