Takaichi unveils plan to parliament

Japanese Prime Minister Sanae Takaichi has unveiled a plan to use proceeds from the central bank's sales of exchange-traded funds to finance her flagship investment projects.

The Bank of Japan decided on 30 October to increase its annual sales of ETF holdings to 860 billion yen, about $5.5 billion, up from 330 billion yen. Takaichi said the additional proceeds would be set aside to redeem bonds issued to fund public spending on economic security and growth.

"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 the lower house.

Search for non-tax revenue

The plan is part of the administration's search for non-tax revenue to bankroll an ambitious spending push without relying too heavily on additional debt issuance. Takaichi's government is preparing a large economic package, and the ETF proceeds offer a way to fund it while keeping borrowing in check.

A share of the central bank's annual net profit, including gains from ETF sales, is paid into state coffers.

Market rout in the background

Takaichi spoke as Japan's Nikkei average fell more than 5 per cent on Friday, led by artificial intelligence and chip shares, after fears of a pullback in AI spending triggered a broad market sell-off following the US midterm elections.

"I am aware share prices, particularly those of AI and chip sectors, are falling sharply," she told parliament, adding that the government was watching the situation closely but would not comment on specific market moves because prices are set by the market. She said her focus remained on building a strong economy by strengthening industries where Japan holds a competitive edge.