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American SICO - 4.1 A Band-Aid Known as Reverse Repo
Balance at the overnight reverse repo program (RRP) at New York Fed has been rising very rapidly lately, especially in the past week (see chart below). The magnitude of its daily fluctuation is now large enough to affect the balance-sheet pressure at the big banks and consequently the price of risk assets. Thus, it is very useful to have a good understanding of the role that RRP plays in the financial plumbing system that convert fiscal/monetary policies into market price actions. chart Because of the complexity of this subject matter, I am going to split the discussion into a three-article series: • What RRP is ... (full story)