Reserve Tranche

You go to Vegas with your buddies. You have a tendency to get carried away at the tables, so you take $500 to gamble, and give another $500 to your friend to hold onto for you. That way, if you blow through the first $500 in Hour One, you still have something left for the rest of the trip.

That second $500, the money you gave to your friend to hold for you, represents a kind of reverse tranche.

In real life, you would be a country that is part of the International Monetary Fund, and your buddy would be the IMF itself. The reverse tranche is a kind of reserve each IMF member country is required to provide the fund. If the nation reaches some financial emergency (like blowing all its money on its first five hands of blackjack), it can tap into the tranche without owing the IMF a service fee.

If it goes over the amount in the reverse tranche, it becomes a kind of loan (known as a credit tranche), and now the country has a time limit in which to pay it back, and will be hit with a service fee, as well as potential interest. Sorta like if you blow through that second $500 on Day Two in Vegas, and you need to borrow money from your buddy.