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September 1979

Repurchase Agreements

by Norman N. Bowsher

In recent years, an increasing number of major financial developments have occurred, including such innovations as savings accounts subject to automatic transfer, NOW accounts, and money market mutual funds. Another significant financial development has been the rapid growth in repurchase agreements (RPs). This article discusses RPs and their principal uses and provides a perspective on their recent growth. Further, this article explores the implications and potential importance of RPs for both financial markets and stabilization policy.