Reverse repurchase refers to the transaction behavior that financial lenders lend money to financial integrators, collect securities as collateral, recover principal and interest in the future, and lift the pledge of securities. Investors or financial institutions can also conduct reverse repurchase transactions in stock exchanges and inter-bank bond markets. The subjects of reverse repurchase transactions are banks, securities holders (borrowers) and cash holders; Participants in the reverse repurchase of exchanges are mainly institutional investors other than banks, such as money market funds and finance companies. Especially now, the setting of the new share subscription ceiling has forced many institutions to participate in reverse repurchase transactions.
2. What is the Federal Reserve?
The United States Federal Reserve System, referred to as the Federal Reserve, is responsible for performing the duties of the United States central bank. The system was established according to the Federal Reserve Act 19 13 12.23. The core management body of the Federal Reserve is the Federal Reserve Board of Directors.
The Federal Reserve System of the United States consists of the Federal Reserve Board in Washington, D.C. and 65,438+02 regional federal reserve banks in major cities of China. As the central bank of the United States, the Federal Reserve obtains power from the United States Congress, and exercises duties such as formulating monetary policy and supervising American financial institutions.
3. What does the Federal Reserve reverse repurchase represent?
The Fed's reverse repurchase is mainly related to the previous "flood irrigation" policy. Under the double pressure of epidemic spread and economic recession, the Federal Reserve irresponsibly printed and released nearly 6 trillion yuan, and the dollar storm swept the world. Now, a lot of dollars with nowhere to go can only flow back to the Fed's account.
The reverse repurchase of the Federal Reserve means that the Federal Reserve sells securities to counterparties in exchange for cash in order to withdraw funds from the market. Banking institutions are willing to return free funds to the Federal Reserve. At this time, the dollar market is well funded, indicating that there is too much money supply. After the implementation of reverse repurchase, QE (quantitative easing policy) may reduce or even raise interest rates in the future.
Since July, 20021,the reverse repo rate of the Federal Reserve has increased by 0.05% in just one month. With the expiration of the US debt ceiling, it also stimulated the rise of overnight reverse repo rate. For the Fed, increasing the intensity of overnight reverse repurchase is to give American capital a breathing space, during which the pressure of dollar inflation is eased.