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 greatest honor history can bestow is that of peacemaker.”
—Richard M. Nixon (1913–1995)
“A man will not need to study history to find out what is best for his own culture.”
—Henry David Thoreau (1817–1862)
“The history of his present majesty, is a history of unremitting injuries and usurpations ... all of which have in direct object the establishment of an absolute tyranny over these states. To prove this, let facts be submitted to a candid world, for the truth of which we pledge a faith yet unsullied by falsehood.”
—Thomas Jefferson (1743–1826)