A retirement operation, also known as a repo loan, is a short-term fundraising instrument. In the case of a repo transaction, financial institutions essentially sell securities to someone else, usually to a government, as part of an overnight transaction and agree to buy them back later at a higher price. The warranty serves as a guarantee to the buyer until the seller can reimburse the buyer and the buyer earns interest in exchange. In its simplest form, a repurchase transaction is a secured loan that involves a contractual agreement between two parties, committing to sell a security at a certain price, with an obligation to subsequently redeem the security at another specified price. In essence, a retirement transaction is therefore similar to a short-term interest rate loan against certain guarantees. Both parties, the borrower and the lender, are able to meet their investment objectives in terms of financing and secured liquidity. The term repo has given rise to many misunderstandings: there are two types of transactions with identical cash flows: the Fed has also carried out daily and long-term repo operations. Because short-term interest rates are closely linked, volatility in the repo market can easily spread to the federal funds rate. The Fed can take direct steps to keep the policy rate in its target area, by offering its own „repo trades“ at the Fed`s target rate.

When the Fed first intervened in September 2019, it offered at least $75 billion in daily rest twice a week and $35 billion in long-term repo. Subsequently, it increased the volume of its daily loans to $120 billion and reduced its long-term loans. But the Fed has indicated that it wants to withdraw the intervention: Federal Reserve Vice Chairman Richard Clarida said, „It may be appropriate to gradually withdraw from active repo operations this year,“ as the Fed increases the amount of money in the system by buying Treasuries. In the Lehman Brothers case, rest was used as Tobashi schemes to temporarily mask significant losses due to intentional, half-closed time trades during the reference season. This abuse of Repos is similar to Goldman Sachs` swaps in the „Greek Debt Mask“[20], which were used as a Tobashi scheme to legally circumvent the Maastricht Treaty`s deficit rules for active members of the European Union and allow Greece to „hide“ more than €2.3 billion in debt. [21] The parties agree to cancel the transaction normally the following day. This transaction is called Reverse Repurchase Agreement or Reverse Repo. Deposits were traditionally used as a form of secured loan and were treated as such for tax purposes. However, modern repurchase agreements often allow the cash lender to sell the security provided as collateral and replace an identical security at the time of redemption. [14] In this way, the cash lender acts as a borrower of securities and the repo contract can be used to take a short position in the security, much like a securities loan could be used.

[15] While conventional deposits are generally credit risk instruments, there are residual credit risks. . . .