Demystifying the Repo Market
a deep dive into the "base layer" of repo
Every day in global finance, trillions of dollars are transacted in an obscure but crucial funding market: the market for repurchase agreements, or “repo” for short. The world has slowly shifted onto a secured standard, where shadow banks play an increasingly central role in the monetary system, using repos as a major wheel greaser. Uncovering the mysteries of the repo market has thus become crucial to understanding modern monetary plumbing.
In this comprehensive subscriber special, we’ll demystify the seemingly intricate triparty repo market — the “base layer” of repo — unveiling in detail its origins, daily cycle, monetary plumbing, and flows, all mapped out using our trademark visuals. Let’s dive in.