Bank of Japan will set guidelines when time comes to sell ETFs, says Kuroda

[TOKYO] Bank of Japan Governor Haruhiko Kuroda shrugged off the chance of an early exit from ultra-loose monetary policy on Friday but said he will lay out guidelines when the time comes to unload the bank's huge risky asset holdings.

Mr Kuroda said while it was premature to debate a departure from current settings, considerations on how to unload the BOJ's massive holdings of exchange-traded funds (ETF) will be spelt out when inflation approaches its 2 per cent target.

For now, however, inflation remains distant from that goal.

"When Japan's inflation approaches our target, we will deliberate an exit strategy at our policy-setting meeting including details such as the timing and means for selling ETFs," Mr Kuroda told parliament.

Mr Kuroda made the remark in response to a question by an opposition lawmaker on what exit strategy the BOJ had in mind for its massive stimulus.

In selling ETFs, the BOJ will aim to do so at appropriate prices to avoid losses, while ensuring its sales do not destabilise financial markets, Mr Kuroda said.

The BOJ took steps in March to make its ETF buying more flexible in response to growing criticism its huge purchases were distorting markets and loading up the central bank's balance sheet with too much risky assets.

Some academics and former policymakers have floated ideas for removing ETFs from the BOJ's balance sheet, such as selling them to households.

"It could be among future options," Mr Kuroda said, when asked about the idea of the BOJ selling ETFs to households. "But we aren't discussing anything specific," he added.

REUTERS