In India, the Reserve Bank of India (RBI) uses repo and Reverse Repo to increase or reduce the money supply in the economy. The interest rate at which the RBI lends to commercial banks is referred to as ”repo”). In the event of inflation, the RBI can increase the pension rate, which prevents banks from lending and reduces the money supply of the economy. [17] From September 2020, RBI rest is set at 4.00% and reverse rest at 3.35%. [18] A pension purchase contract is a sale of securities for cash with the obligation to repurchase the securities at a predetermined price – according to the borrowers. A lender, such as a bank. B, will enter into a repurchase agreement for the purchase of fixed-rate securities from a lending counterparty, for example. B of a trader, with the promise of the resale of the securities within a short period of time. At the end of the term of the contract, the borrower repays the interest-plus money to a deposit to the lender and repays the securities. The Federal Reserve and the European Repo and Collateral Council (an arm of the International Capital Market Association) have attempted to estimate the size of their respective pension markets. At the end of 2004, the U.S. consumer market reached $5 trillion.
Particularly in the United States and, to a lesser extent, in Europe, the pension market contracted in 2008 as a result of the financial crisis. By mid-2010, however, the market had recovered significantly, exceeding, at least in Europe, its pre-crisis high. [12] At first Bear Stearns, then Lehman, could not sell enough deposits to pay these lenders. Soon, no one wanted to pay them anymore. It got to the point where Lehman didn`t even have enough money at his disposal to make pay slips. Before the crisis, these investment banks and hedge funds were completely unregulated. After the 2008 financial crisis, investors focused on a certain type of ”repo,” known as Repo 105. It has been speculated that these deposits played a role in Lehman Brothers` attempts to conceal its declining financial health that led to the crisis. In the years following the crisis, the repo market declined significantly in the United States and abroad. However, in recent years it has recovered and continued to grow.
