What is the reverse repurchase operation in the open market?

Pay attention to the reverse repurchase data of the official WeChat account with the same name, which can be directly queried and statistically pushed every week, which is particularly simple and convenient.

Reverse repurchase refers to the transaction behavior that financial lenders lend funds to financial integrators, collect securities as collateral, recover principal and interest in the future, and release the pledge of securities. Reverse repurchase by the central bank means that the People's Bank of China buys securities from primary dealers and agrees to sell them to primary dealers on a specific date in the future. Reverse repurchase refers to the operation of the central bank to put liquidity into the market, and positive repurchase refers to the operation of the central bank to recover liquidity from the market. The simple explanation is active lending, and the transaction that obtains bond pledge is called reverse repurchase transaction. At this time, the central bank plays the role of investor, and is a lender who accepts bond pledge and lends money.

Investors or financial institutions can also conduct reverse repurchase transactions in stock exchanges and inter-bank bond markets.

The central bank's open market reverse repurchase operation is intended to borrow funds from the market, provide funds to market participants including banks, insurance and other financial institutions, and ensure adequate liquidity supply. Today, the central bank announced that it will carry out the reverse repurchase operation of 1.2 trillion yuan in the open market on February 3, which is an extraordinary move made during the Spring Festival when the epidemic is raging, the overseas capital market turmoil is intensifying, and the China stock market is also facing confidence turmoil. Historically, the Bank of China has never put such a huge amount of liquidity into the open market in one day, which is unprecedented. It can be seen that the confidence and determination of the management to care for the market will help the people of the whole country unite as one and win this battle against the epidemic!

On February 2nd, the central bank announced that in order to maintain the reasonable abundance of liquidity in the banking system and the stable operation of the money market in the special period of epidemic prevention and control, the central bank will carry out the reverse repurchase operation of 1.2 trillion yuan in the open market on February 3rd to ensure sufficient liquidity supply. The reverse repurchase operation in the open market is actually "reverse repurchase", so what is reverse repurchase, why reverse repurchase, and what is its role?

1. Definition:

Reverse repurchase refers to the transaction behavior that financial lenders lend funds to financial integrators, collect securities as collateral, recover principal and interest in the future, and release the pledge of securities. Generally speaking, the central bank puts money into the market, that is, more money in the market is undoubtedly beneficial to asset prices. More popularly speaking, it is "releasing water".

2. Why reverse repurchase?

As we all know, during the Spring Festival this year, the external market plummeted, and the A50 index also fell a lot. It is expected that our A shares will also be affected, but how can we stabilize market confidence? In addition to language appeasement, we need something tangible. The currency is about to expire, so we invest 1.2 trillion to stabilize market confidence. There is no doubt that it is good for the stock market.

3. What does reverse repurchase have to do with us?

Reverse repurchase means that the central bank buys securities, so the central bank will put money into the market; When it comes to reverse repurchase, it is necessary to say that the national debt is reversed. The so-called reverse repurchase of government bonds is essentially a short-term loan. In other words, individuals lend their own funds through the national debt repurchase market to obtain fixed interest income; The repurchase party, that is, the borrower obtains the loan with his own national debt as collateral, and repays the principal and interest after maturity. Generally speaking, it is to lend money through the national debt repurchase market, which is actually a short-term loan, that is, you lend money to others and get fixed interest; Others use national debt as collateral to repay the principal and interest at maturity. Reverse repurchase is super safe, equivalent to national debt.