At the end of the year, the Federal Reserve began to prepare to buy $40 billion of treasury bond. Some small partners may think that this is to expand the balance sheet, but it is not. Firstly, this 40 billion belongs to RMP (Reserve Management Purchases), which is not intended to stimulate the economy or actively release funds, but to maintain the minimum reserve safety threshold of the banking system. It is to prevent the banking system from being stripped away too much by factors such as fund allocation, tax payment, and year-end settlement of enterprises by the Ministry of Finance at the end of the year. Can you briefly explain the differences between RMP, QE, and QT QE stands for actively expanding the balance sheet, with the goal of lowering long-term interest rates and increasing systemic liquidity. That is commonly known as releasing water. QT=Proactively shrinking the balance sheet with the goal of draining and tightening the financial environment. RMP is completely different from QE, as it maintains water levels and avoids systemic water shortages. The essence of RMP is for the Federal Reserve to replenish the fallen water, not to add more water to the pool. Therefore, this is not to expand the balance sheet. In addition, the purchase of 40 billion treasury bond also includes reinvestment, that is, MBS will be used to purchase US bonds when they are due. This part does not increase the size of the balance sheet, but is just an adjustment of the asset structure. More importantly, the Federal Reserve has clearly stated two points in its announcement: RMP will maintain a high pace until April 2026 (as the Treasury Department will significantly increase non reserve liabilities in April), but after April, as seasonal factors disappear, the size of purchases will rapidly decrease. What truly determines liquidity is not RMP, but whether SLR is relaxed, whether banks can expand their balance sheets, whether the Treasury continues to replenish its reserves, and whether the Federal Reserve will reduce the size of ON RRP. Bitget VIP， Lower rates and more generous benefits