In particular, Part B acts as a lender in a pension institution, while Seller A acts as a cash borrower and uses the guarantee as collateral; in an inverted repo (A) is the lender and (B) the borrower. A pension is economically similar to a secured loan, with the buyer (actually the lender or investor) obtaining guarantees to protect themselves from a seller`s default. The party that sells the securities at first is actually the borrower. Many types of institutional investors conduct repo transactions, including investment funds and hedge funds. [5] Almost all guarantees can be used in a repo, although highly liquidated securities are preferred, as they can be sold more easily in the event of default and, more importantly, they can easily be obtained on the open market, where the buyer has created a short position in the pension guarantee through an inverted repo and a sale in the market; at the same time, against liquid securities is not recommended. Repo is a form of guaranteed loan. A basket of securities serves as an underlying guarantee for the loan. Securities law is transferred from the seller to the buyer and returns to the original owner after the contract is concluded. The most commonly used guarantees in this market are U.S.

Treasury bonds. However, government bonds, agency securities, mortgage-backed securities, corporate bonds or even shares can be used in a repurchase transaction. A repurchase agreement or a „repo“ is the sale of securities related to an agreement for the seller to buy them back from the buyer at a higher price at a later date. The difference between the sale price and the future repurchase price is interest, with the purchaser of the securities effectively providing the seller with a guaranteed loan for a period of time, the guarantees being used to secure the loan. The interest rate is called reposatz and all income from the securities earned over the life of the pension period is returned to the original seller, although they no longer own the securities. In India, the Reserve Bank of India (RBI) uses repo and Reverse Repo to increase or reduce the money supply in the economy. The interest rate at which the RBI lends to commercial banks is referred to as „repo“). In the event of inflation, the RBI can increase the pension rate, which prevents banks from lending and reduces the money supply of the economy. [17] From September 2020, RBI rest is set at 4.00% and reverse rest at 3.35%. [18] If the Fed wants to tighten the money supply, hungry for liquidity, it sells the bonds to commercial banks through a buy-back or a short repot.