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Economically, they are both loans against financial instruments. The difference is the collateral posted - repos by the Fed are generally against Treasury securities. This is not a small difference: it makes it much easier for a bank to access liquidity, since not all of its assets are Treasury securities. There’s a mechanical difference: a discount window ...


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This is because in order for many business to stay liquid they often have to issue short term debt. Many financial firms need liquidity so much that they literally make loans that are for duration of only one day. However, the more people invest their savings in bonds which are usually long term debt (most bonds have maturity over 5-10y), the less money is ...


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