 Repos and reverse repos are transactions in which a borrower agrees to sell securities to a lender and then to repurchase the same or similar securities after a specified time, at a given price, and including interest at an agreed-upon rate.Repos are collateralized or secured loans in contrast to federal funds loans which are unsecured.The creation of credit and transfer of the created funds to another bank, creates the need for the 'net-lender' bank to borrow to cover short term withdrawal (by depositors) requirements.