The Bank of Japan is accelerating the unwinding of its massive ETF holdings: Starting in January, the Bank of Japan will nearly triple its annual ETF sales, from ¥330 billion to ¥860 billion in book value. However, it will still take ~43 years to fully unwind the portfolio, down from 112 years. Nevertheless, the market impact is expected to remain limited, with planned annual sales of roughly ¥2.4 trillion at market value compared with average daily TOPIX trading turnover of approximately ¥9 trillion. Japanese equities initially came under pressure following the announcement, but investors showed confidence that the market could absorb the additional supply, with the Nikkei 225 still up +25% year-to-date and the Topix up +16%. Meanwhile, faster ETF disposals could generate approximately +¥800 billion in additional annual revenue for the BoJ, boosting its surplus payments to the government. This could provide additional funding for Prime Minister Sanae Takaichi's spending agenda, including economic security initiatives, growth investments and higher defense outlays. Even with accelerated sales, the BoJ's enormous ETF portfolio will take decades to unwind.