What is Reverse Repo?

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A **Reverse Repurchase Agreement (Reverse Repo or RRP)** is a short-term, collateralized transaction where one party (the investor, or the Federal Reserve in open market operations) purchases securities, typically U.S. Treasury securities, from another party (the borrower) and agrees to sell them back at a slightly higher price on a specified future date, often the next day, effectively functioning as a secured, short-term loan.

Reverse Repo

What is Reverse Repo?

What is the primary mechanism of a Reverse Repurchase Agreement and how does it function as a monetary policy tool for the Federal Reserve?

How does the massive volume of the Federal Reserve's Overnight Reverse Repurchase Agreement (ON RRP) facility influence short-term interest rates and market liquidity?

What is the relationship between Reverse Repurchase Agreements and the tokenization of Real-World Assets (RWAs) in decentralized finance?

What are the primary risks associated with Reverse Repurchase Agreements, and how are they mitigated by the collateralized nature of the transaction?

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