History
In the US, repos have been used from as early as 1917 when wartime taxes made older forms of lending less attractive. At first repos were used just by the Federal Reserve to lend to other banks, but the practice soon spread to other market participants. The use of repos expanded in the 1920s, fell away through the Great depression and WWII, then expanded once again in the 1950s, enjoying rapid growth in the 1970s and 1980s in part due to computer technology.
In July 2011, concerns arose among bankers and the financial press that if the 2011 U.S. debt ceiling crisis leads to a default it could cause considerable disruption to the repo market. This is because treasuries are the most commonly used collateral in the US repo market, and as a default would downgrade the value of treasuries it could result in repo borrowers having to post far more collateral.
Read more about this topic: Repurchase Agreement
Famous quotes containing the word history:
“In every election in American history both parties have their clichés. The party that has the clichés that ring true wins.”
—Newt Gingrich (b. 1943)
“We are told that men protect us; that they are generous, even chivalric in their protection. Gentlemen, if your protectors were women, and they took all your property and your children, and paid you half as much for your work, though as well or better done than your own, would you think much of the chivalry which permitted you to sit in street-cars and picked up your pocket- handkerchief?”
—Mary B. Clay, U.S. suffragist. As quoted in History of Woman Suffrage, vol. 4, ch. 3, by Susan B. Anthony and Ida Husted Harper (1902)
“What you don’t understand is that it is possible to be an atheist, it is possible not to know if God exists or why He should, and yet to believe that man does not live in a state of nature but in history, and that history as we know it now began with Christ, it was founded by Him on the Gospels.”
—Boris Pasternak (1890–1960)