Japan moves to redirect household cash into investments and revamp foreign reserve fund

Japan announced a comprehensive financial strategy to shift about ¥1,140 trillion in household cash and deposits toward market‑based assets by 2040, aiming to raise the share of stocks, bonds and investment trusts from 23 % to 40 %. The plan targets private capital for growth sectors such as artificial intelligence and semiconductor manufacturing, and includes regulatory reforms, new investment‑product frameworks and relaxed banking‑ownership rules.

In parallel, the government is drafting a reform of the Foreign Exchange Fund Special Account that holds roughly ¥1.3 trillion in foreign‑exchange reserves. After a record ¥11.735 trillion (about $73 billion) yen‑buying operation in May, officials seek to generate better returns from the remaining reserves while preserving the ability to intervene in currency markets. Lawmakers have floated the idea of consolidating the reserves into a sovereign‑wealth‑fund‑style vehicle together with Bank of Japan ETF holdings and pension assets.

Both initiatives are part of a broader effort to mobilise private capital, strengthen Japan’s fiscal position and support strategic industries.