Czech Central Bank Considers Adopting Bitcoin As Reserve Asset
Ale Michl, Governor of the Czech National Bank (CNB), has revealed that the countrys central bank is exploring Bitcoin (BTC) as a potential reserve asset.The governor made this known in a recent interview with the Financial Times, where he addressed key aspects of the banks monetary policy and strategy for reserve diversification. Taking to X, Michl reaffirmed his comments from the Financial Times interview, confirming that he spoke about the banks consideration of Bitcoin as a reserve asset. CNBs Reserve Diversification Strategy The governor highlighted the apex banks success in reducing Czech inflation from 17.5% in 2022 to its target level. Per Michi, the apex bank has taken significant steps toward increasing the countrys gold reserve to 5% from 0%. Similarly, the central bank also plans to allocate 30% of its reserve to equities, aligning with its broader diversification strategy. Interestingly, the bank is currently considering Bitcoin as a potential reserve asset. Michi states this consideration is driven by Bitcoins zero correlation with bonds and BTCs prospects of making a large portfolio attractive. No Immediate Decision Due to Bitcoin VolatilityWhile the banks board is currently analyzing and discussing Bitcoin as a potential reserve asset, Michi emphasized that there will not be an immediate decision. He asserted that the board needs to analyze the move carefully before reaching a decision. Furthermore, he recognized Bitcoins volatile nature, noting that its extreme price fluctuations present a challenge in fully leveraging its low correlation with traditional assets. Due to this volatility, Michl pointed out that Bitcoin could either become highly valuable or plunge to zero.Accordingly, he plans to order the board to carefully assess BTCs potential inclusion in the countrys reserve. Notably, he disclosed plans to issue the directive tomorrow, January 30, 2025. Growing Interest in Bitcoin Among Countries The development reflects the growing interest in Bitcoin among countries. While countries like El Salvador have adopted Bitcoin, some are still considering whether to incorporate BTC into their reserves. Earlier this month, the United States government established a working group to assess the possible creation of a national digital asset reserve. Although the order did not mention any cryptocurrency, speculation suggests that Bitcoin will likely be included in the reserve. This speculation takes inspiration from Donald Trumps campaign promise to make America the crypto capital of the world through several initiatives, including establishing a national Bitcoin stockpile with legally seized BTC tokens. Since Trumps reelection, several countries have considered following the U.S. approach. In December, Japan declined a proposal to include Bitcoin in its reserve, noting that crypto assets cannot be classified as foreign exchange. Currently, Bitcoin is trading at $101,945, with a 24-hour trading volume of $43.57 billion.
Text source: The Crypto Basic
