Czech National Bank Considers Bitcoin as Reserve Asset

Key Points:

• The Czech National Bank is considering adding Bitcoin to its reserves but prioritizes doubling its gold holdings to 100 tons by 2028.
• Bitcoin’s high annual returns outperform gold, but its price unpredictability remains a challenge for central banks.

The head of the Czech National Bank, Aleš Michl, said that Bitcoin might constitute a component of its foreign exchange reserves, although the institution seeks diversification.

Read more: Czech Republic Crypto Tax Exemption Law Was Approved on December 6 

Czech National Bank Considers Bitcoin for Reserves

The Czech National Bank currently doesn’t intend to buy any cryptocurrency, and any such future move would have to be decided on by its board.

Presently, the CNB is looking to increase its gold holdings, and it targets to double its gold holdings from 50 tons to 100 tons in 2028 to make gold account for 5% of the bank’s total assets, reflecting a cautious approach to reserve diversification. Given the growing appeal of Bitcoin, Michl described its price as a “double-edged sword,” noting how the cryptocurrency offers potentially high returns with significant risks due to its high volatility.

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Analysts noted that Bitcoin has been performing strongly during the past years, outperforming gold returns every year. Adding it to central banks’ reserve lists could redefine what a “safe” asset is. Either way, the price volatility of such a move remains a concern.

Meanwhile, in the US, Senator Cynthia Lummis has proposed the creation of a national Bitcoin reserve. In her proposal, she suggests buying Bitcoins by selling part of the US Federal Reserve’s gold reserves without touching money from the budget.

Lummis, a Republican senator, sees Bitcoin as a major long-term asset and is pushing the plan first mentioned during Donald Trump‘s presidency.