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Special Purchase and Resale Agreement - SPRA

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Dictionary Says

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 Says

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 Definitions

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    Bank Of Canada - BOC

    The central bank of Canada, that came into existence after the passing of the Bank of Canada Act in 1935, influences the country's economy and money supply.
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  • Interest Rate

    The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis, known as the annual ...
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  • Money Supply

    The entire quantity of bills, coins, loans, credit and other liquid instruments in a country's economy.
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    • Sale and Repurchase Agreement - SRA

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    • Open Market Operations - OMO

      The buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system. Purchases inject money into the banking ...
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      The actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. Monetary ...
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