Bank of Japan Begins Historic Shift by Selling Financial Assets
Tokyo, Wednesday, 4 February 2026.
The central bank has officially commenced selling exchange-traded funds to normalize policy, a process Governor Ueda admits will take over 100 years to complete at the current cautious pace.
A Definitive Turn in Monetary Policy
The Bank of Japan (BOJ) has initiated the active sale of exchange-traded funds (ETFs), marking a tangible departure from the aggressive stimulus measures that defined its strategy for over a decade [1][2]. According to balance sheet data released on Tuesday, February 3, the central bank has begun offloading assets accumulated during its era of anti-deflationary interventions [1]. While the BOJ ceased purchasing new assets in March 2024 when it ended its negative interest rate policy, this week’s data confirms that the unwinding phase is now operationally underway [1].
The Scale of the Challenge
The initial sales are modest when viewed against the backdrop of the central bank’s massive portfolio. As of Saturday, January 31, the BOJ had sold approximately 5.37 billion yen in ETFs and 100 million yen in Japanese real estate investment trusts (J-REITs) [1]. Despite this reduction, the bank retains an ETF portfolio with a book value of roughly 37 trillion yen ($238 billion) [1]. To illustrate the magnitude of the remaining assets relative to this initial sale, the reduction represents merely 0.015 percent of the total holdings.
A Century-Long Timeline
The pace of this disposal underscores the BOJ’s cautious approach to avoid disrupting equity markets [1][2]. The bank plans to unwind its ETF holdings at an annual rate of approximately 330 billion yen [1]. At this velocity, the timeline for complete divestment is extraordinarily long; Governor Kazuo Ueda has noted that a simple calculation suggests it would take over 100 years to fully execute the plan [1]. Mathematically, clearing the 37 trillion yen balance at the current annual target would require approximately 112.121 years.
Economic Context and Market Pressures
This shift towards balance sheet reduction occurs as the BOJ navigates a complex economic landscape characterized by a weak currency and rising yields. Following a rate hike in December 2025, the policy rate currently stands at 0.75% [5]. The central bank is pursuing “gradual tightening” to combat inflationary pressures exacerbated by the yen, which is trading around 155 to the dollar [5]. Concurrently, the 10-year Japanese government bond yield has climbed to approximately 2.27%, reflecting market anticipation of fiscal shifts ahead of the snap election scheduled for February 8 [5].