A pension transaction (repo) is a two-legged operation akin to a secured loan. A cash borrower sells securities (the collateral) to the lender and agrees to buy them back at a predetermined price2 Cash borrowers are asset managers, pension funds and insurance companies. Money lenders and corporate treasurers are typical lenders of cash. Deposits are provided by large broker traders, who are also important pension users to finance market-creating stocks, to obtain short-term financing or to invest cash. Renusp transactions can be either bilateral or through a central counterparty3.3 This field assesses the relevance of pension markets to bond and swap markets, thereby contributing to the discussion of the role of debt markets in the broader financial system. In a pension agreement or “repo” securities are sold and a subsequent repurchase agreement is concluded. As a general rule, deposits are used by market participants to obtain financing that uses collateral bonds. They can also be used to obtain certain securities against cash security. Pension markets play a key role in facilitating capital and securities flows into the financial system, providing liquidity to other markets.
 A well-functioning pension market supports the implementation of monetary policy by promoting interest rate decisions on the financial system. At the same time, pension market turbulence could spread to other markets and increase stress in financial markets. This box looks at the impact of repo market disruptions on bond markets and the interest rate swap market. Given the importance of these markets in the financial system, their proper functioning and the potential for turbulence that could affect them, this is important both from a financial stability and monetary policy perspective.  The maturity of the repurchase transaction and, if it is already available, the maturity of the specific pension transactions to be carried out; Pension transactions concluded by the NCBs with the national central banks of the Eurosystem can have an impact on the liquidity of the euro and, therefore, on the single monetary policy when activated. Therefore, in order to better preserve the integrity of single monetary policy, the ECB Governing Council decided on 22 October 2009 that its prior approval should be necessary for certain liquidity agreements concluded by the NCBs with the national central banks of the Eurosystem. 1. Transactions cannot be carried out above the schedule I threshold of this guidance without the ECB`s prior approval.
This threshold also applies to pension transactions, without prejudice to the pre-authorization procedure for article 4 pension transactions.