Matched Sale Purchase Transactions
Definition
Transcations in which the Federal Reserve sells a government security to a dealer or a foregin central bank and agrees to buy back the security to a dealer or a foreign central bank and agrees to buy back the security on a specified date (usually within seven days) at eh same price (the reverse of a repurchase agreement). Such transaction allow the Federal Reserve to temporarily absorb excess reserves from the banking system, limiting the ability of banks to make new loans and investments.
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Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University
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Salomon Brothers World Equity Index (SBWEI)
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