Japan to use BOJ ETF sale proceeds for economic security

Japanese Prime Minister Sanae Takaichi has announced plans to channel proceeds from the Bank of Japan’s sales of exchange-traded funds (ETFs) into a new economic security special account. The move comes as the central bank recently decided to accelerate its ETF sale pace, with additional profits expected to reach approximately 1 trillion yen annually due to rising stock prices.

Takaichi described these proceeds as the “fruits of Japan’s economic growth” and stated they should be reinvested into crisis management and growth sectors to foster a positive economic cycle. The government intends to issue bridge bonds to front-load the procurement of these funds, aiming to stimulate private investment in areas where Japan maintains a competitive edge.

The plan follows a period of market volatility, including a significant drop in the Nikkei average driven by concerns over AI spending. While the Bank of Japan has committed to selling its holdings in a manner that minimizes market disruption and remains independent of political considerations, the government aims to utilize the resulting tax revenue to bolster national economic security.