I show that bank capital regulation lowers long term interest rates by increasing banks’ holdings of long term government bonds, effectively acting as an unconventional monetary policy. I study the implementation of bank capital requirements, and their subsequent relaxation in 2018, to show that stricter capital requirements caused banks to shift their portfolios toward long term government bonds. I develop a quantitative bank portfolio choice model where capital requirements modify banks’ interest rate risk management problem to make long term government bonds a more valuable hedge. The model features costly bank deposit franchises, countercyclical loan losses, and inelastic asset markets to study equilibrium effects on long term interest rates. Using the model, I find that stricter capital requirements caused long term interest rates to fall by 47 basis points. I demonstrate that countercyclical central bank policies dampen the baseline effect on long term rates and crowd-in bank lending.