BOJ considers strategy for large ETF holdings divestment

Bank of Japan (BOJ) Governor Kazuo Ueda said the central bank needs more time to decide how to handle its exchange-traded fund (ETF) holdings. Ueda emphasized the importance of assessing market conditions and risks before making any moves. The BOJ is close to finishing the sale of stocks it bought from troubled banks back in 2002. The bank started selling these stocks in 2007 but paused during the global financial crisis. They resumed selling in 2009 and 2010. By February 2025, the book value of these stocks was ¥52.8 billion ($345 million). The BOJ has been reducing these stocks by about ¥10 billion each month, which will allow them to complete the process sooner than their expected date of March 2026. Investors are concerned that this completion may lead the BOJ to consider reducing its substantial ETF holdings. These holdings are much larger, valued at around ¥37 trillion ($242 billion), and the market value could be even higher. If the BOJ continues to reduce its ETF holdings at the same rate of ¥10 billion per month, it would take over 300 years to completely offload them.