BOJ Is Said To Start Selling ETF Holdings As Soon As January
James WhitmanBank of Japan officials are likely to start selling the central bank's pile of exchange-traded funds as early as next month, according to people familiar with the matter, a process expected to take decades to complete.
Bank of Japan officials are likely to start selling the central bank's pile of exchange-traded funds as early as next month, according to people familiar with the matter, a process expected to take decades to complete.
The bank will offload the assets little by little to avoid roiling markets as was decided at a September policy board meeting, the people said. The holdings had a market value of ¥83 trillion ($534 billion) at the end of September and a book value of ¥37.1 trillion, according to the central bank.
The September decision set out plans to sell the ETFs at a pace of ¥330 billion per year based on book value. A simple calculation indicates the process will take around 112 years if that pace remains unchanged.
The BOJ wants to make the market response of the sales almost unnoticeable like it did for the sales of stocks brought from beleaguered banks in 2000s, the people said. The selling of those stocks was completed in July after about a decade of offloading that didn't disrupt financial markets.
With Japan's stock market rising sharply over the last couple of years, the market value of the assets has surged.
The central bank expects to keep a steady pace of monthly sales, according to the people. There is no change in their stance of minimizing disruption in the market, they added. Still, the bank may stop selling the ETFs if there is an event similar to the Global Financial Crisis in 2008, the people said.
Sumitomo Mitsui Trust Bank won an auction to be the conductor of the sales, the central bank reported earlier this month.
