DEFINITION of 'Purchase and Resale Agreements - PRAs'

An arrangement between the Bank of Canada and dealers whereby the Bank buys treasuries from a dealer, and the dealer agrees to repurchase the treasuries the next day.

BREAKING DOWN 'Purchase and Resale Agreements - PRAs'

In a PRA, the Bank of Canada is essentially lending money to the dealer at the midpoint of the overnight operating band rate in order to increase the dealer's liquidity.

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RELATED FAQS
  1. What is the difference between a repurchase agreement and reverse repurchase agreement?

    Learn how a repurchase agreement is a form of collateralized lending and a reverse repurchase agreement is a form of collateralized ... Read Answer >>
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    Read about the lender risks of participating in reverse repurchase agreements or for dealers who use the Fed's overnight ... Read Answer >>
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