The Bank of Japan is preparing to begin selling portions of its massive exchange-traded fund portfolio as early as next month, marking the first step in an unwinding process so slow and controlled that it could run for more than a century.
What Happened
The central bank intends to sell small amounts of its ETF holdings each year to avoid shaking equity markets, Bloomberg reported, quoting sources.
That approach was formalized in a September policy board decision outlining annual sales of roughly ¥330 billion based on book value.
Given the BOJ’s ¥37.1 trillion book value in ETF holdings at the end of September, the math implies a drawdown timeline of about 112 years if the pace is not adjusted.
The BOJ’s ETF position, originally accumulated as part of its unconventional monetary easing, has grown dramatically in market value.
As of late September, the portfolio was worth roughly ¥83 trillion ($534 billion), lifted by Japan's surging stock market over recent years.
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Officials want the exit process to be largely invisible to market participants, mirroring the central bank’s steady, decade-long disposal of shares purchased from distressed lenders in the 2000s.
Why It Matters
That earlier program concluded in July without causing market dislocation, and policymakers hope to replicate that outcome with the far larger ETF portfolio.
BOJ planners expect to maintain a consistent monthly selling rhythm, the people said, emphasizing that minimizing volatility remains the priority.
However, they added that the central bank would pause ETF sales if markets faced a systemic shock akin to the 2008 global financial crisis.
Earlier this month, the BOJ said Sumitomo Mitsui Trust Bank had won the mandate to execute the sales program.