Generally speaking, credit risk for real transactions depends on many factors, including the terms of the transaction, the liquidity of the security, the specificities of the counterparties involved and much more. 2) Cash to be paid when buying back the title Despite the similarities with secured loans, deposits are real purchases. However, since the buyer has only temporary ownership of the collateral, these agreements are often treated as loans for tax and accounting purposes. In the event of insolvency, investors can sell their assets in most cases. This is an additional distinction between repo credits and secured loans; For most secured loans, bankrupt investors would be subject to automatic suspension. A repo is a form of short-term borrowing for government bond traders. In the case of a repo, a trader sells government bonds to investors, usually overnight, and buys them back the next day at a slightly higher price. This small price difference is the implicit overnight rate. Deposits are usually used to raise short-term capital. They are also a common instrument for central banks` open market operations. A retirement activity, also known as pension, PR or sale and retirement, is a form of short-term borrowing, mainly in government bonds. The trader sells the underlying security to investors and, after consultation between the two parties, resells it shortly thereafter, usually the next day, at a slightly higher price.
Deposits were traditionally used as a form of secured loan and were treated as such for tax purposes. However, modern repurchase agreements often allow the cash lender to sell the security provided as collateral and replace an identical security at the time of redemption.  In this way, the cash lender acts as a borrower of securities and the repo contract can be used to take a short position in the security, much like a securities loan could be used.  As a general rule, in the case of a repurchase agreement, two counterparties enter into an agreement where one sells securities to the other, while agreeing to repurchase them at a later date at a fixed price. Securities can therefore effectively be considered as collateral for a cash loan. The securities concerned are generally fixed-income securities and pricing is agreed with regard to interest rates. This agreed interest rate is called the repo rate. While many market participants carry out such operations, central banks, when they do, are usually only carried out with certain banks in their short-term national money markets and implemented for the purpose of implementing monetary policy. .