It’s just the opposite of a repo, and it is happening a lot now because it was recently incentivized.
Banks loan out money to FED for a day in exchange for the FED loaning them assets (a repo is functionally the opposite), but they banks now make something like 8-15% interest on the deal since a new official change.
It’s a way to bail out the banks and make it look inconspicuous.
That’s not what a reverse repo is.
It’s just the opposite of a repo, and it is happening a lot now because it was recently incentivized.
Banks loan out money to FED for a day in exchange for the FED loaning them assets (a repo is functionally the opposite), but they banks now make something like 8-15% interest on the deal since a new official change.
It’s a way to bail out the banks and make it look inconspicuous.
Cash is a liability to the bank. Hodling makes them look bad.
I think it used to be that way until this recent change that incentivized doing it, since they make interest greater than inflation for doing it.
I’m just relaying what I read from SuperStonk.