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The Repo Market, Explained
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The Repo Market, Explained

The Wall Street Journal
The Wall Street Journal, 2019
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Editorial Rating

9

Qualities

  • Background
  • For Beginners
  • Engaging

Recommendation

For market stakeholders, September 2019 brought back some bad memories of the 2008 credit crisis, as financial liquidity froze and short-term borrowing costs skyrocketed. For the public, the repurchase agreement (repo) is not a household name, but it is critical to the health and vibrancy of the US financial system. This easy-to-follow video from The Wall Street Journal explains how the repo market ticks, why it triggered panic and what deeper regulatory issues might threaten its efficient functioning. New investors and finance students will find this a basic but valuable primer.

Take-Aways

  • Repurchase agreements (repos) are critical capital markets mechanisms that keep the financial system moving. 
  • On September 16–17, 2019, the repo market ground to a halt as rates skyrocketed.
  • Federal Reserve officials stepped in to provide liquidity and restore the vibrancy of the repo market.

About the Speaker

WSJ Video is a part of the Wall Street Journal Digital Network.

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