The Bank of Japan announced its plan to begin a gradual sale of its holdings in exchange-traded funds (ETFs), in a move aimed at normalizing monetary policy after years of intensive quantitative easing.
The value of these holdings is estimated at around 83 trillion yen (equivalent to about 534 billion dollars), making the Bank of Japan one of the largest investors in these funds globally.
Why gradual selling?
The bank aims to reduce risks to financial markets with this step, as any sudden and large sale could cause sharp fluctuations in the Japanese stock market.
Financial sources indicate that the selling process will be slow and organized, and billions will not be liquidated all at once as rumored in some misleading news, but rather, sales will be made gradually over the years to ensure market stability.
Background on the Bank of Japan's holdings of funds
In recent years, the Bank of Japan has resorted to purchasing exchange-traded funds to support the economy after waves of economic slowdown and contraction, and to mitigate the effects of low inflation. This policy has helped to raise stock prices and stabilize local financial markets.
With the improvement of Japanese economic indicators, the bank sees it as the right time to gradually reduce these holdings without causing shocks to the markets.
The expected impact on the markets
Despite the large size of the holdings, gradual selling means that the impact on the markets will be limited in the short term. However, investors are closely monitoring any movements in this file, especially in the Japanese stock market and the global markets linked to it.
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