mikey_the_kid

mikey_the_kid t1_isozrg5 wrote

Banks have lots of liquidity, they park their money here in a reverse repo with the fed, the fed pays interest to the bank on the reverse repo. The federal funds rate has been going up. Reverse repo rate is tied to the FFR, so the interest payments to the banks have been going up.

Why do banks park money in these agreements? No better risk-reward options out there. They are acting rationally.

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