Special Purchase and Resale Agreement - SPRA

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DEFINITION of 'Special Purchase and Resale Agreement - SPRA'

An open market operation in which the Bank of Canada purchases securities that are repurchased by the seller the following day. This is designed to lower overnight interest rates and increase the money supply.

INVESTOPEDIA EXPLAINS 'Special Purchase and Resale Agreement - SPRA'

In a SPRA, the Bank of Canada buys securities from a chartered bank and agrees to sell them back to the bank the next day. Because selling these securities requires the Bank of Canada to spend some cash, the money supply is increased and this helps decrease overnight interest rates.

This is essentially an expansionary move by the Bank of Canada on the monetary system.

RELATED TERMS
  1. Sale and Repurchase Agreement - ...

    An open market operation, implemented by the central Bank of ...
  2. Money Supply

    The entire stock of currency and other liquid instruments in ...
  3. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  4. Open Market Operations - OMO

    The buying and selling of government securities in the open market ...
  5. Bank Of Canada - BOC

    The central bank of Canada, that came into existence after the ...
  6. Monetary Policy

    The actions of a central bank, currency board or other regulatory ...
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