Examples of secured funding include covered bonds, repurchase agreements and the European Central Bank's Long-Term Refinancing Operation.
Countries also are divided over the treatment of repurchase agreements, a form of short-term borrowing for dealers in government securities.
Repurchase agreements were something new to these bankers, who undoubtedly have all sorts of systems for safeguarding their mortgage loans.
The leaked EU memo also frets about the potential effects on repurchase agreements, a key source of bank liquidity in Europe.
The Federal Reserve and other authorities also are focusing on enhancing the resilience of the markets for triparty repurchase agreements (repos).
Presumably the treasury minions at corporate were investing the cash, earning as much overnight on treasury repurchase agreements as you earn in a month nowadays.
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The transactions in question, known as "window dressing, " involve repurchase agreements, or repos, a form of short-term borrowing that allows banks to take bigger trading risks.
The usual approach is to conduct reverse-repurchase agreements, borrowing from one of its 16 primary dealers for short periods of time in order to finance the assets on its balance-sheet.
Reverse repurchase agreements involve the sale by the Fed of securities from its portfolio with an agreement to buy the securities back at a slightly higher price at a later date.
Repurchase agreements are canceled, the lender taking the collateral.
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First, the Federal Reserve could drain bank reserves and reduce the excess liquidity at other institutions by arranging large-scale reverse repurchase agreements with financial market participants, including banks, government-sponsored enterprises and other institutions.
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