Broadly, it is a category of collateralized securities (known as eligible collateral) with identical credit quality, and as a result trade in the repo market at the same or a very similar repo rate, or the so-called general collateral repo rate. By nature, these securities are substitutes: they can be substituted for one another almost at the same the repo rate. This means that the general collateral repo rate is mainly driven by the supply and demand of cash (cost of borrowing cash), rather than that of a specific issue. The security issues for which there is a general collateral repo market usually belong to the same category (e.g., government bonds) or sub-category (e.g., government bonds maturing in less than 3 years).

Practically, there is only one general collateral basket denominated in a given currency. However, it is possible to have several categories of general collateral denominated in the same currency. For example, in the US, the general collateral may be treasury securities, agency debt, and agency mortgage backed securities (MBS).