New answers tagged federal-reserve
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"I can't use the stock I bought as collateral in the repo market right?"
In principle, you can. Repos can and do happen between non-government actors, with any AAA-rated paper being preferred, but a slice of the repo market does deal in riskier instruments like corporate bonds and equities. But that piece of the repo market likely isn't big enough to ...
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The yield on government bonds is not necessarily equal to fed fund rate. Fed fund rate is a rate at which other banks can borrow from Fed.
This being said the funds rate affects interest rates on all debts since if the banks can borrow more cheaply from Fed they can also offer better terms to their own creditors. Bonds compete on markets for loanable funds ...
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Negative interest rates means that if you take a 1.000 loan, you will pay 900 to the lender. At the same time, if you deposit this same 1.000 in a savings accounts, you will withdraw 900. This is an expansionary monetary policy. In other words, low or negative interest rates estimulates the consumption and destimulates the savings.
It also weaken a country’...
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