Repurchase: The People's Bank of China sells securities to primary dealers and agrees to repurchase securities on a specific date in the future. This is the operation of the central bank to recover liquidity from the market, and the repurchase at maturity is a popular operation of the central bank to put it on the market. The premise of the central bank's repurchase is that the market is relatively prosperous, and the purpose of implementing repurchase is to make the market rise healthily and steadily and avoid inflation caused by too much funds.
Characteristics of positive repurchase: The central bank usually chooses some commercial banks, securities companies or trust companies with strong financial strength, good reputation and active trading as counterparties to conduct transactions through bidding. The central bank takes bonds as collateral, integrates the funds of primary dealers and takes back the currency in the market to the central bank. Generally speaking, the interest rate that the central bank is buying back is often slightly higher than the market lending rate, and the term is generally short, usually 7 days. After the maturity, the central bank redeemed the bonds to complete the repurchase.
The purpose of repurchase is a means for the central bank to withdraw money. Through the repurchase, the funds in the market are recovered to reduce the liquidity of money, and then the funds are released after the repurchase, and the liquidity of money is replayed. Therefore, the repurchase only affects the capital adequacy ratio of the market in the short term. The premise of the central bank's repurchase is that the market is relatively prosperous, and the purpose of implementing repurchase is only to make the market rise healthily and steadily, so as to avoid inflation caused by excessive funds. Therefore, the repurchase is to achieve the purpose of cooling the economy, which belongs to the normal operation taken by the central bank. However, for investors, if the central bank continues to carry out positive repurchase operations, negative signals may appear in the investment market, so we need to be vigilant at this time.
Reverse repurchase: The People's Bank of China purchases securities from primary dealers and agrees to sell them to primary dealers on a specific date in the future, which is the operation of the central bank to put liquidity into the market, and the expiration of reverse repurchase is the operation of the central bank to recover popularity from the market. When the market currency is tight, the central bank often adopts reverse repurchase to alleviate the problem, which is flexible and accurate in regulating the liquidity shortage in the short-term money market, but its general term is short and the effect is not lasting.
The difference between forward repurchase and reverse repurchase is that the People's Bank of China sells securities to primary dealers and agrees to repurchase securities on a specific date in the future. Repurchase is the operation of the central bank to recover liquidity from the market, and it is the operation of the central bank to put liquidity into the market when it expires.
Reverse repurchase means that the People's Bank of China buys securities from primary dealers and agrees to sell the securities to primary dealers on a specific date in the future. Reverse repurchase refers to the operation of the central bank to put liquidity into the market, and when the repurchase expires, it refers to the operation of the central bank to recover liquidity from the market.
Reverse repurchase refers to a transaction in which A buys securities from B and agrees to sell the securities back to B on a specific date in the future.
Repurchase is a transaction in which one party takes a certain amount of bonds as collateral, integrates funds and promises to repurchase mortgage bonds in the future.