Why Would You Make A Repo Agreement? The repo market allows financial institutions that own lots of securities (e.g. banks, broker-dealers, hedge funds) to borrow cheaply and allows parties with lots of spare cash (e.g. money market mutual funds) to earn a small return on that cash without much risk, because securities, often U.S. Treasury
How Do Repo Traders Make Money? In the case of a repo, a dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day at a slightly higher price. That small difference in price is the implicit overnight interest rate. Repos are typically used to raise short-term capital.
How Much Money Is The Government Putting Into Repo Market? On March 12, 2020, the Fed said it would offer $500 billion in a three-month operation. The following day, the Fed planned to inject $1 trillion more, split between a three-month operation and a one-month operation. It was prepared to offer up to $1 trillion