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Goldman: BOJ may opt to sell ETFs gradually on the market.

Goldman Sachs announced on Friday that the Bank of Japan would sell its exchange-traded fund (ETF) holdings gradually in the market rather than opting for other ideas such as transferring them directly to government entities when it decided to unload their holdings in future.

As part of its ultra-loose policy to revive a stagnant economy, the central bank bought ETFs from 2010 for a period of 13 years.

The BOJ hasn't said when or how it will sell its ETFs worth 252 billion dollars, 37 trillion yen, and 70 trillion yen, which it purchased last year.

The BOJ said that when it decided to sell the holdings it would follow three principles. It will dispose of ETFs for a price that is fair, avoids losses to the bank, and does so in a manner that causes minimal disruption in the market.

Goldman Sachs reported that experts had suggested various options to unload the BOJ's ETF holdings, including transferring the ETFs to government entities or to the general public.

The report stated that "however, the method which satisfies both three conditions will likely be a small-scale sale on the open markets over time."

The report stated that to minimise BOJ's losses and their impact on the stock market, it would be reasonable for them to start selling ETFs in fiscal 2026-2027 and to sell at a pace of 600 billion to 1 trillion yen per year.

Goldman's economists, including Akira Otani - a former BOJ executive who headed the financial markets department of the bank - compiled the report.

BOJ Governor Kazuo Ueda said that the central bank would need more time before deciding how to best unload its ETFs.

(source: Reuters)