Investment Rating - The industry investment rating is maintained at "Outperform the Market" [3][34]. Core Insights - The inclusion of short- and medium-term government bonds as reserve assets is gaining attention due to their safety and liquidity, which aligns with reserve asset requirements [4][5]. - The current economic environment is characterized by a "recessionary easing," making the necessity of using government bonds for reserve requirements less critical [8]. - The legal reserve requirement rate of 1.62% is considered high, leading to weaker relative value for other assets [13]. - The relationship between government bond reserve requirements and increased credit issuance is not straightforward, as liquidity released may flow into bond assets rather than credit [15][18]. - The policy of using government bonds for reserve requirements should be viewed as a long-term institutional arrangement [19]. Summary by Sections Section 1: Reserve Asset Inclusion - Short- and medium-term government bonds are suitable as reserve assets due to their government backing and market liquidity [7]. - The practical effect of using government bonds for reserve requirements is similar to a reserve requirement cut but is more market-oriented [7]. Section 2: Current Economic Environment - The current environment is described as "recessionary easing," with significant room for reserve requirement cuts remaining [12]. - Credit issuance has notably decreased since the second quarter, particularly among smaller banks [12]. Section 3: Legal Reserve Requirement Rate - The legal reserve requirement rate has remained unchanged at 1.62% since 2009, which is higher than loan yields and interbank asset yields [13]. - The relative value of other assets is diminished due to this high reserve requirement rate [13]. Section 4: Credit Issuance Dynamics - The liquidity released from government bond reserve requirements may not necessarily lead to increased credit issuance due to weak credit demand and regulatory constraints [15][18]. - The banking sector shows a tendency towards "fiscalization," with a shift in asset allocation from credit to bonds [18]. Section 5: Long-term Policy Considerations - The inclusion of government bonds in reserve requirements is seen as a means to enhance the stability of medium- to long-term funding for banks [24]. - A balanced approach is necessary to ensure that the policy does not distort market demand for government bonds [28].