Is there any material difference between a repo and a collateral backed loan?
The one I can think of is that the collateral is owned by the lending party during the loan. So if the Fed uses this with treasuries they get to collect interest on it.
Why did the Fed adopt this as a tool over simple buying and selling? It seems to provide the same effect to the money supply and they don't need the interest from the treasury collateral given they return most of their money to the Treasury every year.