Bond for Bond Lending

What Does Bond for Bond Lending Mean?
A lending structure used in the Federal Reserve's security lending facility, whereby borrowers receive a loan of bonds, by using all or a portion of their own portfolio of bonds for collateral. The bond for bond lending structure is different from the traditional cash for bond lending structure, in which the borrower takes the funds as cash instead.

Investopedia explains Bond for Bond Lending
The bond for bond lending structure is sometimes preferable because it can allow for better cash management for the lender. The Federal Reserve sometimes uses this structure to help minimize the impact on the aggregate level of cash available in the banking system.

Related Terms

Bond
Facility
Federal Reserve Bank
M2
Monetary Policy
Money Supply
Primary Dealer
Term Auction Facility (TAF)
Term Securities Lending Facility (TSLF)
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