Repo Markets

Repo markets are financial arrangements where institutions like banks or investors lend or borrow cash using securities, such as government bonds, as collateral. In a repurchase agreement (repo), the borrower sells securities to a lender with the agreement to buy them back later at a slightly higher price, which includes interest. These markets provide short-term funding and liquidity, enabling financial institutions to manage funds efficiently. Repos are crucial for maintaining the stability and smooth functioning of the financial system, ensuring liquidity for markets and institutions that need quick access to cash or securities.