A deposit that is guaranteed by the pledging of security. The bank (depositee) has to guarantee the safety of these deposits by pledging securities as collateral. The depositor effectively receives title to some type of security (usually money-market security) from the bank against deposited funds. The value of such a security must be of equal or greater value. Placement of collateral is meant to mitigate the risk of default. In interbank borrowing/ lending arrangements, secured deposits are arranged using the sale and repurchase agreement (repo).