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:
“When the history of this period is written, [William Jennings] Bryan will stand out as one of the most remarkable men of his generation and one of the biggest political men of our country.”
—William Howard Taft (1857–1930)
“To care for the quarrels of the past, to identify oneself passionately with a cause that became, politically speaking, a losing cause with the birth of the modern world, is to experience a kind of straining against reality, a rebellious nonconformity that, again, is rare in America, where children are instructed in the virtues of the system they live under, as though history had achieved a happy ending in American civics.”
—Mary McCarthy (1912–1989)
“Philosophy of science without history of science is empty; history of science without philosophy of science is blind.”
—Imre Lakatos (1922–1974)