Positive repurchase uses bonds as collateral and then redeems the bonds. Positive repurchase is usually used to solve the problem of capital withdrawal, which is equivalent to exchanging things for things. Positive repurchase is usually one of the methods often used by the central bank. The popular explanation is that when the central bank runs out of money, the central bank does not want to sell securities for money, and relying on selling securities to withdraw funds is not a perfect way, so The central bank then mortgages the bonds and pledges corresponding funds to fill its own funds, and then redeems the bonds at the agreed time.

Reverse repurchase uses funds to purchase bonds from a dealer and then sells the bonds to the dealer. Reverse repurchase can help banks increase loan lines, adjust bank interest rates, and help the stock and bond markets rise.

The relationship between positive repurchase and reverse repurchase

If you look carefully, you will find that positive repurchase and reverse repurchase are opposites. A conducts positive repurchase to B and mortgages bonds. When redeemed at maturity, in fact, B is also conducting reverse repurchase from A at this time, using funds to purchase bonds, and then selling them to A at the agreed time.