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).
This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Comments