I have a few questions regarding repurchase markets. The professor told our class today that Repo (Repurchase) Markets are essentially markets where the government lends corporates a very cheap rate of borrowing when money is needed urgently where treasury bills are used as a collateral for this borrowing to happen.

Now I know how repo markets general work in a very basic sense, but there are some things I do not understand what my professor is talking about:

  1. Why are treasury bills used as a collateral for corporates to borrow large amounts of money? This implies corporates own a large amount of t-bills to begin with? If so, why are t-bills worthy enough to be considered as a collateral to borrow large sums of money? is this because the government can resell these treasuries?

  2. The professor said something about this is due to quantitative easing, and the repo markets demand is going up. What does repo markets demand going up even mean? Demand for what?

I have a lot more questions, but for now could someone help me understand what is going on here with regards to my confusion?

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