Repurchase Agreements (Repos) are the most important non-deposit source of funds for commercial banks, which means banks buy and sell Fed Funds to adjust liquidity.

Question

Quizplus · Accepted Answer

Repurchase Agreements (Repos) are a source of short-term funding for banks, but they involve selling securities with an agreement to repurchase them, not buying and selling Fed Funds. Fed Funds are unsecured loans between banks to meet reserve requirements.

Repurchase Agreements (Repos) Are the Most Important Non-Deposit Source of Funds