A policy has emerged to use the Bank of Japan's ETF sales profits as a government funding source. This article briefly explains the background to the ETF purchases and the framework under which enormous unrealized gains do not directly translate into payments to the national treasury.
The focus this time is the policy of using the Bank of Japan's ETF sales profits as a government funding source. Prime Minister Takaichi Sanae (高市早苗) indicated that profits from additional ETF sales would be positioned as a funding source for special accounts, suggesting a plan to issue new government bonds with future additional sales profits serving as the repayment source.
ETFs are investment trusts traded on stock markets, and the Bank of Japan holds large amounts, primarily ETFs linked to stock indexes. Following a policy shift in 20010, the Bank of Japan expanded its ETF purchases as part of large-scale monetary easing. Its holdings gradually accumulated, making the Bank of Japan a major holder in the Japanese stock market.
As of the end of March 2026, the market value of the Bank of Japan's ETF holdings had reached approximately ¥94 trillion, equivalent to about 7.8% of the market capitalization of domestic stocks listed on the Tokyo Stock Exchange. How the sales will proceed and the policy for disposing of the holdings are the focus of attention.
The Bank of Japan purchased ETFs to stabilize the market and support the provision of funds, not to create a source of government revenue. The conversion of sales profits into a funding source has raised issues concerning the institutional framework and the complexity of how the funds would be used.