Bank of Japan Completes Stock Sales, Shifts Focus to ETF Holdings

The Bank of Japan (BOJ) has completed the sale of stocks it acquired from financial institutions during domestic banking crises spanning from 2002 to 2010, marking the end of a nearly two-decade effort to stabilize the banking system amid financial turmoil. This rare intervention, aimed at protecting banks from steep losses during market downturns, saw stock holdings reduced from approximately 2.5 billion yen to zero by July 10, 2025. With this milestone achieved ahead of schedule, market focus now shifts to the BOJ's much larger holdings of exchange-traded funds (ETFs), totaling 37 trillion yen with a market value of 70 trillion yen, which were accumulated through a massive asset-buying program starting in 2013. While the BOJ ceased purchasing ETFs last year, it has not yet determined when or how it will begin unloading these assets, with Governor Kazuo Ueda emphasizing the need for further review. Analysts, including Goldman Sachs, anticipate a gradual market-based sale rather than transfers to government entities, which could introduce volatility and impact investor behavior in Japanese equities. This transition signals a broader shift away from the radical stimulus policies under former Governor Haruhiko Kuroda toward more conventional monetary strategies, potentially influencing global perceptions of Japan's economic stability.