Repo

Definition: A "repo" is a sale and repurchase agreement. Repos are used to relieve shortages of liquidity in the market. A repo is where a bank sells a gilt-edged security (or other asset) back to the Bank of England in exchange for cash. They agree to buy the gilt back again a fortnight or so later. It is a way for them to get hold of cash in the short-term to ensure they can meet their day to day commitments. The Bank of England use it as a way to maintain the level of interest rates set by the Monetary Policy Committee.