3 ms·
> they store their cash with the fed (through a repo [repurchase] agreement) temporarily. What does this gain them? Are they paid interest?
by MuffinFlavored 5y ago
> they store their cash with the fed (through a repo [repurchase] agreement) temporarily.
What does this gain them? Are they paid interest?
- eloff 5y agoThey pay for the privilege of having the Fed hold their cash.
- professoretc 5y agoBanks don't like holding cash (because it doesn't belong to them, and could be withdrawn at any time). So it's actually the opposite: they pay for the privilege of not having to hold onto that cash.
- notahacker 5y agoContrary to the other two replies, yes, they are paid interest (it's a reverse of the standard repo where they borrow money from the Fed and pay the interest)
- selectodude 5y agoReading the comments on financial articles on HN makes me question the comments on the stuff I don't actually know something about.