The Bank of Japan should swap its exchange-traded fund holdings for perpetual bonds to ensure that an eventual exit from stimulus doesn’t upend equities, according to one of Prime Minister Fumio Kishida’s advisers.
The idea would enable the BOJ to reduce its exposure to risk assets by moving them off its balance sheet in a way that doesn’t trigger market turmoil, according to Ken Shibusawa, chairman of Commons Asset Management and a member of Kishida’s "new capitalism" panel.
As of the end of March, the central bank held ¥51.3 trillion ($348 billion) of ETFs at market value, roughly around 7% of the market capitalization of the Japanese stock market at that point, Bloomberg data shows.