69 sats \ 2 replies \ @nout 18 May 2022 \ parent \ on: Reverse repo operation hits all time high... Again bitcoin
I'm also new to this and have no idea what I'm talking about, but I heard Greg Foss explaining it in some podcast with Preston Pysh and that explanation made sense (the concept itself doesn't make much sense, but the explanation did). I can't find which one that was unfortunately :(
I also have this for reference: https://www.zerohedge.com/markets/repo-crisis-looms-feds-reverse-repo-usage-soars-351bn-fifth-highest-ever
Ah I see, are you sure it was a conversation about reverse repos and not repos?
At first glance through this Fed article, it seems like reverse repos actually reduce reserve balances, though I'm unclear on how that affects money supply.
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RROs are the banks giving back money to the Fed because the banks have no other places in th economy to deploy/loan the funds out to.
The bank will give money back to the Fed, effectively reducing the money supply (temporarily)
Here is a basic summary of a RRO:
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