The SLR reform that is being discussed is actually much more important than it appears on the surface. It is not an ordinary regulatory adjustment, but a rule that may change the underlying incentive logic of the US banking system. Simply put, it will improve the liquidity structure. However, the current market is in a bear market sentiment, and 'singing long' seems to have become a political correctness, because the ultimate determinant of the market trend is not a single variable, but the combined force formed by the interaction of dozens of weight factors. First, review the background. The Enhanced Supplementary Leverage Ratio (eSLR) system originated from the 2008 financial crisis and was originally intended to serve as a "reserve for risk capital requirements". However, in practice, due to its fixed high standards, it has become a more stringent constraint than risk capital standards in certain environments (especially during periods of pressure), providing banks with incentives to reduce market making, hold low-risk assets, and shrink their balance sheets. This rule revision is actually a relaxation and optimization of supervision. The regulatory authorities have realized that the past leverage rules were too rigid, thereby suppressing necessary market functions. The new regulations link leverage ratio to risk (and set an upper limit), with the goal of improving the liquidity and efficiency of financial markets while ensuring the stability of the banking system. According to the old standards, large banks must maintain at least 6% eSLR, while under the new regulations, the upper limit only needs to not exceed 4%. This means that asset expansion is no longer blocked by the fixed leverage red line, essentially increasing the variable space of bank balance sheets. Due to the multiplier effect of the financial system, this structural loosening may even create an "institutional foundation" for future system level expansion. The most crucial question is: Where will this portion of capital flow after it is released? Treasury bond? Is it a repurchase? Is it a high-risk loan? Or is it a risk market? From my personal point of view, the maximum probability of this released capital is to take orders for US treasury bond bonds and act as a lubricant for the US bond market. This is crucial for maintaining the stability of the US dollar system in the current era of massive US bond issuance. So eSLR reform is not a "explicit stimulus" like reserve requirement ratio cuts, it is a "mechanistic relaxation" that affects the marginal expansion ability of banks. Short term emotions may not reflect, but long-term monetary transmission pathways will be profoundly altered. In other words, increasing the purchase of treasury bond is equal to reducing the liquidity extraction effect of treasury bond on the risk market, which is beneficial to the entire financial system. In short, using bank expansion to take on US Treasury bonds indirectly protects the liquidity pool of risky assets from being drained. good thing