Generally, a contract under which one party receives cash from a counterparty in exchange for the deposit of collateral for a fixed period of time. The rights arising from the deposited collateral – usually securities – pass to the owner during the term of the contract (agreement under which institutional investors or companies can exchange cash for securities for a fixed period of time. At the end of the contract, which can take various legal forms, the securities are returned to their initial owner. All title and rights to the securities are transferred to the buyer of the securities for the duration of the contract). – Specifically, by a bank that obtains central bank money by temporarily retiring securities, usually at its central bank; it being open to what percentage the central bank will service the submitted securities with its money. – The term “repurchase agreement” has replaced the term “pledging of securities” in central bank parlance since about 1980. – See deposit money, cost transaction, pension transaction, pension rate.
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