The Repurchase Agreement Refined: GCF Repo® - FEDERAL RESERVE BANK of NEW YORK

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The Repurchase Agreement Refined: GCF Repo®

June 2003 Volume 9, Number 6

JEL classification: G19, G29

Authors: Michael J. Fleming and Kenneth D. Garbade

One of the largest and most important of the money markets is the market for repurchase agreements. In a repurchase agreement, a borrower of money effectively agrees to provide securities as collateral to the lender to mitigate credit risk. GCF Repo is a recent innovation in this market that reduces transaction costs, enhances liquidity, and facilitates the efficient use of collateral.

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7 pages / 127 kb

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