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Under a Repurchase Agreement, demand account balances above a predetermined “peg” are automatically swept into a Repurchase (REPO) account and invested excess bank funds in the Overnight Fed Funds market. Customer investments are collateralized by US government/agency securities. Funds are transferred back to demand account to maintain the peg balance.
REPO Investments are collateralized backed by U.S. government/agency issued securities, but covered by FDIC insurance.