repo market

The repo (repurchase agreement) market is a financial system where institutions, like banks and investment firms, lend or borrow cash against collateral, usually securities such as government bonds. In a typical repo, the borrower sells securities to the lender with an agreement to buy them back later at a slightly higher price, covering interest. This process provides short-term funding for institutions and helps maintain liquidity in financial markets. Think of it as a short-term loan secured by assets, enabling organizations to manage cash flow efficiently.