Czech central bank approves proposal to explore Bitcoin for foreign exchange reserves
The CNB has been actively exploring new asset classes over the past two years, driven by a desire to enhance returns and reduce risk.
Key Takeaways
- The Czech National Bank is exploring new asset classes, including Bitcoin, for its international reserves.
- The CNB aims to diversify its investment portfolio but has not announced immediate changes.
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The Czech National Bank’s (CNB) board has approved a proposal to analyze new asset classes like Bitcoin for its international reserves management strategy, according to a Jan. 30 press release. The decision, reached at a Bank Board meeting on Thursday, is part of the CNB’s ongoing efforts to diversify its reserve portfolio.
Even though the CNB’s official statement stayed mum on Bitcoin, Governor Aleš Michl had already tipped his hand on Wednesday, saying he’d push his team to explore Bitcoin’s place in their reserves at Thursday’s meeting.
The post-meeting press release confirms that this exploration is officially underway.
“Based on the results of the analysis, the Bank Board will then decide how to proceed further,” as noted in the release. “No changes will be implemented in this area until then. Any changes in the reserve portfolio will be disclosed in the quarterly information on the CNB’s international reserves and in the CNB’s annual report.”
According to the Financial Times, CNB is considering investing up to 5% of its $7 billion reserve in Bitcoin to diversify its portfolio. If approved, this could make CNB the first major central bank in the West to include digital assets in its reserves.
Michl later clarified on X that no immediate decision was forthcoming, stating the central bank would first carefully assess the proposal’s merits and feasibility.
The idea, however, faces opposition from Finance Minister Zbyněk Stanjura due to Bitcoin’s price volatility, which he believes is unsuitable for reserve holdings.
“The central bank should symbolize stability. If you look at bitcoin trading, it’s definitely not a stable asset,” Stanjura said in a recent statement.
Since taking office in 2022, Michl has focused on diversifying reserves, increasing gold purchases and shifting investments toward equities.
In an interview with Partie Terezie Tománková on CNN Prima News earlier this month, the CNB governor said he was contemplating the inclusion of Bitcoin in the bank’s foreign exchange diversification strategy, targeting low inflation and financial stability.
Michl said he found Bitcoin interesting, but noted the uncertainty of its technology and proposed a cautious approach, with potential minor acquisitions. The CNB currently favors traditional assets like gold, stocks, and bonds and has plans to increase its gold reserves.
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