Bank of Japan to Begin Selling ETF Holdings in January 2026

The Bank of Japan is preparing to begin selling its massive holdings of exchange-traded funds (ETFs) as early as January 2026, according to sources familiar with the matter. This move is expected to extend over a very long timeframe to avoid any market disruptions, as reported by Bloomberg.

Insiders indicated that the central bank will gradually liquidate assets at a low pace, implementing a decision made by the monetary policy board last September to make the sales' impact on the market nearly unnoticeable.

Holdings Volume and Exit Strategy

According to central bank data, the market value of the Bank of Japan's ETF holdings reached approximately 83 trillion yen (equivalent to 534 billion dollars) at the end of September, while the book value of these assets was around 37.1 trillion yen.

The September decision stipulates selling the funds at an annual rate equivalent to 330 billion yen based on book value, which means - based on rough calculations - that the exit process could extend for about 112 years if this rate remains unchanged.

Aim: Avoid Market Shocks

Insiders noted that the Bank of Japan aims to replicate its previous experience in selling stocks acquired from troubled banks during the early 2000s, a process that took about ten years and was completed last July without causing significant market fluctuations.

With the strong rise in Japanese stocks over the past two years, the bank's unrealized gains from ETF holdings have increased, highlighting the need for a cautious and long-term exit strategy.

Flexibility in Times of Crisis

According to sources, the bank intends to maintain a steady monthly sales pace while keeping the option to temporarily suspend sales in the event of a major financial shock, similar to the global financial crisis in 2008.

Execution Entity

Sumitomo Mitsui Trust Bank recently won the bidding to oversee the sales operations, as announced by the Bank of Japan earlier this month.