Oxford Economics: Bank of Japan Cautiously Plans to Sell ETF and J-REIT Holdings

On September 19, the Bank of Japan unexpectedly announced that it would begin selling its holdings of exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs). Specifically, the central bank plans to sell ETF holdings at a pace of approximately ¥330 billion per year and J-REITs at a pace of about ¥5 billion per year.

“The impact of this plan on financial markets is expected to be relatively limited, as the Bank of Japan has chosen a cautious approach in terms of both the process and scale of operations,” Oxford Economics stated in its latest commentary. The central bank’s current priority is to avoid market turmoil rather than rapidly cleaning up its balance sheet.

The institution further noted that the Bank of Japan’s plan is flexible and aims to avoid disrupting the market. The central bank can adjust the pace of asset sales at future monetary policy meetings. Additionally, depending on market conditions, it will allow the trustees instructed to sell these assets to temporarily adjust or suspend sales.