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Developments in the Australian Repo Market

Author

Listed:
  • Chris Becker

    (Reserve Bank of Australia)

  • Ashley Fang

    (Reserve Bank of Australia)

  • Jin Cong Wang

    (Reserve Bank of Australia)

Abstract

The market for repurchase agreements (repos) – where cash is borrowed and lent using securities as collateral – plays an important role in the implementation of monetary policy and as a source of finance for the bond market. The Reserve Bank has commenced publishing more detailed data about the repo market. This article introduces these data and highlights some key developments. The domestic repo market has grown considerably in recent years, with non-residents emerging as prominent borrowers of cash in return for securities. The spread between repo rates and expectations for the cash rate has risen noticeably over the past couple of years. This increase appears to be linked to developments in the foreign exchange swap market as well as arbitrage related to the Australian bond futures market. Demand from non-residents to fund trading activities and, to a lesser extent, regulatory requirements have contributed to the increase in repo rates.

Suggested Citation

  • Chris Becker & Ashley Fang & Jin Cong Wang, 2016. "Developments in the Australian Repo Market," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 41-46, September.
    • Handle: RePEc:rba:rbabul:sep2016-05
    as

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    File URL: https://www.rba.gov.au/publications/bulletin/2016/sep/pdf/rba-bulletin-2016-09-developments-in-the-australian-repo-market.pdf
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    References listed on IDEAS

    as
    1. Bank for International Settlements, 2015. "Regulatory change and monetary policy," CGFS Papers, Bank for International Settlements, number 54, december.
    2. Belinda Cheung & Mark Manning & Angus Moore, 2014. "The Effective Supply of Collateral in Australia," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 53-66, September.
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    Cited by:

    1. Debelle, Guy, 2020. "The Reserve Bank of Australia’s policy actions and balance sheet," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 285-295.

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