The head of the Czech National Bank has expressed a desire to convert part of the country’s reserves into Bitcoin, which could represent a groundbreaking move for western central banks.
This information is reported by the Financial Times.
Aleš Michl, the head of the CNB, announced he would present a plan to invest in Bitcoin at an upcoming meeting, aimed at diversifying the bank's reserves. If approved, the CNB could hold up to 5% of its reserves, amounting to 140 billion euros, in Bitcoin.
"Bitcoin appears to be a promising option for diversifying our assets. While some may see it as a bubble, I believe its popularity will continue to rise regardless of circumstances, as it becomes an alternative for a growing number of investors", Michl stated.
Traditionally, central banks store their assets in conservative investments such as US government bonds. A few hold stocks, but nearly none have publicly invested in cryptocurrency.
Michl emphasized that his perspective on Bitcoin is fundamentally different from that of his colleagues.
Last year, representatives of the European Central Bank stated that "the fair value of Bitcoin is still zero", highlighting that "Bitcoin is not suitable as a payment method or as an investment tool", while former ECB official Benoît Cœuré previously called Bitcoin "a malevolent offspring of the financial crisis".
Reports suggest that if the Czech bank had kept 5% of its currency reserves in Bitcoin over the past decade, its annual return would have increased by 3.5%, although volatility would have also doubled.
The central bank's currency reserves of 140 billion euros are equivalent to approximately 45% of the Czech GDP. The CNB already stands out among central banks, as 22% of its portfolio consists of stocks, and Michl aims for half of this portfolio to be in US stocks in three years, compared to the current 30%.
Reminder:
US President Donald Trump has ordered the creation of a working group on cryptocurrencies to propose new regulatory guidelines for digital assets and explore the possibility of establishing a national cryptocurrency reserve.
Bitcoin and other cryptocurrencies, alongside a newly launched token named after Donald Trump, cooled off on January 21, following the absence of any mention of this asset class in the first program package from the US president after his inauguration.
Bitcoin surged to a record high of over $106,000, driven by comments from newly elected President Donald Trump suggesting a plan to create a strategic reserve of US Bitcoins, similar to the strategic petroleum reserve.