Japanese Prime Minister Sanae Takaichi has unveiled a plan to tap proceeds from the central bank’s sales of exchange-traded funds to finance her flagship investment projects, as a deepening AI-fuelled market rout threatens to dent tax revenue. The Japan Takaichi BOJ ETF plan was announced in parliament on Friday, according to Reuters.
Takaichi said the government will use proceeds from the Bank of Japan’s increased sales of its ETF holdings to fund spending on areas critical to the country’s economic security. “Additional proceeds from the (ETF) sales are fruits of Japan’s economic growth, so it’s appropriate to reinvest them for spending on crisis management and growth areas,” she told parliament. The proceeds will be set aside for the redemption of bonds that will be issued to fund public spending on those areas, she added.
A market rout frames the announcement
Japan’s Nikkei average fell more than 5% on Friday as fears of a pullback in AI spending after the Democrats’ midterm-election sweep in the United States triggered a broad market rout. “I am aware share prices, particularly those of AI and chip sectors, are falling sharply,” Takaichi said, adding that the sell-off requires vigilance as it would affect countries across the globe. “Our focus, however, would be to create a strong economy,” by boosting investment in sectors where Japan holds a competitive edge, she told parliament.
The government is keeping a close watch on the sell-off, with analysts warning that sustained market weakness could weigh on the economy and disrupt the Bank of Japan’s gradual tightening plans. The BOJ kept interest rates steady last month but stressed its resolve to focus on inflation risks, reinforcing market bets on a rate hike as soon as December.
A central bank unwinding years of stimulus
The Bank of Japan decided on 30 October to increase annual sales of its ETF holdings to 860 billion yen — about $5.5 billion — from 330 billion yen. The central bank holds a large stash of exchange-traded funds built up over years of stimulus, and the stepped-up sales are part of its slow unwinding of that support. Takaichi’s pitch is to treat the extra cash tied to those sales as a way to help fund economic-security projects and other growth spending, rather than relying only on new borrowing.
Bank of Japan Governor Kazuo Ueda will speak at an IMF seminar in Washington on Friday, and at an event in central Japan on 30 November. Markets will be watching both appearances for any signal on the timing of the next rate move — and for whether the central bank is comfortable with the government spending the proceeds of its own balance-sheet unwind.
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Sources: Reuters via EuropeSays (6 Nov 2026); Finimize (6 Nov 2026); IndexBox (6 Nov 2026).
