0 sats \ 1 reply \ @kr 18 May 2022 \ parent \ on: Reverse repo operation hits all time high... Again bitcoin
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.
https://www.newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/repo-reverse-repo-agreements
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69 sats \ 0 replies \ @jp OP 18 May 2022
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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