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:
“The history of the world is none other than the progress of the consciousness of freedom.”
—Georg Wilhelm Friedrich Hegel (1770–1831)
“Well, for us, in history where goodness is a rare pearl, he who was good almost takes precedence over he who was great.”
—Victor Hugo (1802–1885)
“Properly speaking, history is nothing but the crimes and misfortunes of the human race.”
—Pierre Bayle (1647–1706)