Infer why a bank enters into a repurchase agreement with the Federal Reserve.(1 point)
Responses
The bank can sell the repurchase agreement back to the Federal Reserve at a higher price.
The bank can sell the repurchase agreement back to the Federal Reserve at a higher price.
The bank requires a long-term loan from the Federal Reserve to help with operations.
The bank requires a long-term loan from the Federal Reserve to help with operations.
The bank needs a short-term inflow of cash to increase its reserves and liquidity.
The bank needs a short-term inflow of cash to increase its reserves and liquidity.
The bank wants to reduce their long-term liabilities.
1 answer
The bank needs a short-term inflow of cash to increase its reserves and liquidity. Repurchase agreements with the Federal Reserve can provide banks with temporary liquidity to manage their day-to-day operations and meet reserve requirements.
1 answer