Japan’s largest opposition party wants to use the Bank of Japan’s exchange-traded funds (ETFs) to help cover the cost of making high school education free as part of the normalization of monetary policy, according to a party official.

"It’s abnormal that a central bank is holding risky assets with a book value of ¥37 trillion ($244 billion),” the Constitutional Democratic Party of Japan (CDP)’s finance chief Takeshi Shina said in an interview on Tuesday. "Including the latent profits, the assets are about double that value, and it’s a problem that those profits aren’t being returned to the public.”

Shina said he hoped to join forces with other smaller opposition parties to submit a bill to parliament this year after the annual budget is passed. He said the timing was right given increased interest in the fate of the ETFs.

While the central bank began normalizing its policy in earnest last year when it scrapped its yield curve control program and negative interest rate policy, its ETF holdings have remained untouched even as BOJ Gov. Kazuo Ueda oversaw further rate hikes.

Now that the BOJ is set to finish offloading millions of dollars of bank stocks bought during the financial crisis, greater attention is turning to the fate of the ETFs and the possible market ructions their potential disposal might cause.

As part of the CDP’s proposal, the BOJ would sell its ETFs to the government in exchange for grant bonds, and the dividend income from those ETFs would be used to help fund policies aimed at reversing declining births and making high school education free. In the year ended March 2024, the BOJ’s dividend earnings from its ETF holdings were ¥1.24 trillion.

The CDP submitted a similar bill last year that didn’t include funding to make high school education free. The bill wasn’t backed by other parties and was shelved after Prime Minister Shigeru Ishiba called a national election.

The BOJ purchased the ETFs as part of a monetary stimulus program aimed at boosting inflation. Ueda has refrained from detailing what the plans are for the assets, citing the complexity of the issue.

Some of the proceeds from the BOJ’s ETF dividends are already paid into the nation’s coffers, but Shina argued that direct ownership would end up benefiting more people.

Still, the CDP will likely need to get some other opposition parties on board to put pressure on the ruling Liberal Democratic Party and Komeito coalition. Ishiba’s administration is currently operating as a minority government after losing seats in the last general election.

While the CDP controls the parliamentary budget committee, the ruling coalition is courting two other opposition parties, as it tries to negotiate a deal with them to safely pass the budget in time for the next fiscal year.

For that deadline to be met, the ruling parties must secure the support of at least the Democratic Party for the People (DPP) or Nippon Ishin no Kai by the end of this week.

Shina declined to comment on the specifics of the fate of the budget but said his party would not support it unless the ruling coalition swallowed the CDP’s budget revision proposals.

The opposition party is calling for the inclusion of measures costing ¥3.8 trillion that would fund the dropping of an additional tax on gasoline, offer more educational support and increase wages for people who work in care homes and nurseries.

Negotiations between the ruling parties and the DPP over raising the threshold for tax exemptions from the current ¥1.03 million resumed this week, after discussions stalled last year when the two parties couldn’t agree on the level of the new threshold.

Local media have reported that the ruling coalition is closer to reaching a deal with Nippon Ishin, with Ishiba seeking to finalize the degree to which the government will cover tuition for high school students in a party leader meeting this week.