The head of the Czech National Bank intends to shift a portion of the country's reserves into Bitcoin, potentially making it a pioneering move for Western central banks.
This is reported by the Financial Times.
At a meeting on Thursday, Aleš Michl will present a plan to invest in Bitcoin as a means of diversifying the CNB's reserves. He stated that if the board approves this plan, the CNB could hold up to 5 percent of its reserves, amounting to €140 billion, in Bitcoin.
"Bitcoin seems like a good option for diversifying our assets. While some may create a bubble around Bitcoin, I believe the trend will continue to grow regardless, as it offers an alternative for more investors", Michl noted.
Traditionally, central banks hold their reserves in conservative assets like U.S. Treasury bonds. Some banks own stocks, but very few have publicly invested in cryptocurrency.
Michl remarked that he has a "completely different philosophy" regarding Bitcoin compared to his colleagues.
Last year, representatives from the European Central Bank stated that "the fair value of Bitcoin is still zero", adding that "Bitcoin is not suitable as a means of payment or as an investment".
Reports indicate that had the Czech bank held 5% of its currency reserves in Bitcoin over the past decade, its annual yield would have increased by 3.5%, although volatility would have also doubled.
The central bank's foreign reserves of €140 billion are approximately 45% of the Czech GDP. The CNB is already distinguished among central banks with 22% of its portfolio in stocks, and Michl aims for half of this portfolio to comprise U.S. stocks in three years, up from the current 30%.
Reminder:
U.S. President Donald Trump has ordered the creation of a working group on cryptocurrencies to propose new regulations for digital assets.
Bitcoin and other cryptocurrencies saw a decline on January 21, following the absence of any mention of the asset class in Trump's first stimulus package after his inauguration.
Bitcoin surged to a record high above $106,000, spurred by comments from President Trump suggesting a plan to establish a U.S. strategic Bitcoin reserve, akin to the strategic oil reserve.
