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Markets

Top ETF buyer Bank of Japan turns lender as liquidity dries up

At $266bn and counting, BOJ's holdings will help brokers fill orders

The Bank of Japan holds nearly 80% of the country's ETFs. (Photo by Konosuke Urata)

TOKYO -- The Bank of Japan will start lending shares in exchange-traded funds to brokerages as early as spring, looking to restore some of the liquidity it has drained from the market via its massive monetary easing program.

The central bank began considering ETF lending in April as part of a plan to improve the sustainability of its asset buying, which has distorted markets due to the sheer scale of the effort.

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