Resumen de Implementing Repurchase Agreements in Emerging Markets

William B. Osterberg

• Repurchase Agreements (repos) have received increasing scrutiny as a result of their involvement in the recent financial crisis. While viewed as an important part of the �shadow banking system� allowing non-banks to access liquidity and expand leverage, the legal and accounting status of most �repos� is still unclear. Meanwhile, the usage of �repos� in the development of emerging financial markets continues to expand, playing a pivotal role in monetary operations and fixed income markets. In this briefing, I discuss the main issues surrounding �repos� in relatively undeveloped markets (EMs1) including the legal status of the first leg of the �repo� as a true sale and the distinction between �repos� and �sell-buybacks.� I also discuss aspects of EMs that are relevant to the adoption of �repos.� Primary among these is the thinness of markets, the legal status of �repos,� accounting practices, monetary policy. Recommendations are offered regarding specific issues common to these countries.