Repo Markets : Background Note
Repo markets are an essential component of liquid Government debt markets, acting as a transmission belt between money and debt markets, as well as serving to conduct key functions for the efficient operation of debt markets. These include, among others, credit risk management, funding debt portf...
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
Washington, DC
2016
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| Online Access: | http://documents.worldbank.org/curated/en/2016/03/26122592/repo-markets-draft-background-note http://hdl.handle.net/10986/24100 |
| Summary: | Repo markets are an essential component of liquid Government debt markets, acting
as a transmission belt between money and debt markets, as well as serving to conduct
key functions for the efficient operation of debt markets. These include, among others,
credit risk management, funding debt portfolios, playing the yield curve, and covering
short positions and settlement fails. The hybrid nature of a repo between a
collateralized loan and a full transfer of ownership makes it a very versatile instrument
for a broad range of market participants with very different business models. However,
this is at the same time the reason for its complexity. This note addresses the legal,
structural, accounting, tax, regulatory and infrastructure factors that are decisive for
repo market development. The legal and infrastructure factors that underpin repo
markets functionality are evolving ones and may be different depending on the
country. The perspective adopted in this note intends to provide a balanced account of
both the conceptual issues in each topic and relevant country cases, with the objective
of providing policy makers with analytical tools to address their country specific
context. |
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