Repurchase agreement

Credit providers have to scramble the funds.

Repo rates start to go up or interest rates start to rise.

You get trade fails, all these things.

And if you get a default, that may cascade through the system because you get in financial markets interlocking balance sheets.

Now, we'll start with the repo rate.

This is called SOFR.

In short, what is repo? Repo is the borrowing rate collateralized by treasuries.

What does that mean? If you have a treasury and you need to get cash out of it, the percent that you pay in the market is called the repo rate.

And that average repo rate is expressed by the term SOFR, S-O-F-R.

We're only really starting to see the contours.

I mean, we used to talk about the repo being a four, five, six trillion dollar market globally.

Now it's probably close to like 20, 30 trillion because we're kind of seeing more after the financial crisis there's been this progressive bringing a bit of sunlight to different parts of it and some of it is basically like internal Repo, like JP Morgan Securities will lend money to some other bank desk there.

And it's done in the form of repo.

But I think it's fascinating.

Commercial solutions are already operating in the market today, while central banks, market infrastructures, regulators, and industry participants around the world are actively building the foundations for broader adoption.

So what makes repo and collateral such compelling use cases? The answer lies in the role they play in the financial system.

Repo markets provide secured funding and support market liquidity, market making, and monetary policy transmission.

At the same time, they have become increasingly important for collateral transformation and collateral mobility across markets and jurisdictions.

In many ways, the ability to move collateral efficiently is a cornerstone of modern financial stability.

You can print money and buy the long end of the maturity curve.

You can issue Repos, they're almost swaps in the way the percent was doing them.

He's increased the repo window of, I think, $60 billion.

There's no reason why that can't go up.