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:
“While the Republic has already acquired a history world-wide, America is still unsettled and unexplored. Like the English in New Holland, we live only on the shores of a continent even yet, and hardly know where the rivers come from which float our navy.”
—Henry David Thoreau (1817–1862)
“Throughout the history of commercial life nobody has ever quite liked the commission man. His function is too vague, his presence always seems one too many, his profit looks too easy, and even when you admit that he has a necessary function, you feel that this function is, as it were, a personification of something that in an ethical society would not need to exist. If people could deal with one another honestly, they would not need agents.”
—Raymond Chandler (1888–1959)
“All history becomes subjective; in other words there is properly no history, only biography.”
—Ralph Waldo Emerson (1803–1882)