The Repo Market is a financial system where institutions borrow and lend money using securities as collateral. In a repurchase agreement, or repo, one party sells a security to another with the promise to repurchase it later at a higher price. This allows lenders to earn interest while providing liquidity to borrowers. Repos are crucial for maintaining stability in the financial system, as they help banks and other financial institutions manage their short-term funding needs. The market is often influenced by central banks, such as the Federal Reserve, which can adjust interest rates to ensure smooth operations.