[thisisnotmyname]

What happens if banks systematically are unable to pay these loans back?

[powowow]

The fed holds US treasury bonds as collateral.

Would you be worried about default if you loaned me a million dollars, and I gave you a million dollars of treasuries as collateral?

It blows my mind that people are getting all worried about fully collateralized short term interbank lending.

[aguyfromnb]

>What happens if banks systematically are unable to pay these loans back?

And how would that happen exactly?

But if it did, the Fed would extend the loan, or loan more. Not very complicated.

[bendbro]

So it's not a loan

[quickthrowman]

The lender holds the collateral for the duration of the repo loan...

[me_me_me]

Middle class can handle that, they already have a lot of experience with this. Better to leave it up to them to clean that mess up.