Special Purchase and Resale Agreement (SPRA)
An open market operation in which the Bank of Canada purchases securities that are repurchased by the seller the following day. This is designed to lower overnight interest rates and increase the money supply. Investopedia Says:
In a SPRA, the Bank of Canada buys securities from a chartered bank and agrees to sell them back to the bank the next day. Because selling these securities requires the Bank of Canada to spend some cash, the money supply is increased and this helps decrease overnight interest rates.
This is essentially an expansionary move by the Bank of Canada on the monetary system. Related Terms:
Bank of Canada - BOC
Interest Rate
Monetary Policy
Money Supply
Open Market Operations
Sale and Repurchase Agreement - SRA |