The head of the Czech National Bank, Aleš Michl, is looking to invest the country's reserves into Bitcoin, marking a potentially groundbreaking move for Western central banks.
This was reported by the Financial Times.
During a meeting on Thursday, Michl will present a proposal to his board to invest in Bitcoin as a strategy for diversifying the CNB's assets. If approved, the bank could hold up to 5 percent of its €140 billion reserves in Bitcoin.
"Bitcoin appears to be a good option for diversifying our assets. Some officials might create a bubble around Bitcoin, but I believe the trend will continue to rise without them, as it becomes an alternative investment for many people," Michl stated.
Traditionally, central banks hold their reserves in conservative assets like US Treasury bonds, with very few venturing into cryptocurrency investments.
Michl emphasized that he has a "completely different philosophy" regarding Bitcoin compared to his peers.
Last year, representatives from the European Central Bank stated that the "fair value of Bitcoin is still zero," claiming that "Bitcoin is not suitable as a means of payment or as an investment," while former ECB official Benoît Cœuré called Bitcoin "the evil spawn of the financial crisis."
It has been reported that if the Czech bank had held 5% of its currency reserves in Bitcoin over the last decade, its annual return would have increased by 3.5%, although volatility would have also doubled.
The central bank's €140 billion reserves equate to about 45% of the Czech GDP. The CNB is already distinguished among central banks with 22% of its portfolio in equities, 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 ordered the creation of a cryptocurrency working group to propose new regulations for digital assets and explore the possibility of creating a national cryptocurrency reserve.
Bitcoin, along with other cryptocurrencies and the newly launched Donald Trump token, experienced a downturn on January 21 after the first package of programs from the president did not mention the asset class.
Bitcoin soared to record highs above $106,000, spurred by comments from President Trump suggesting plans to create a strategic reserve of US Bitcoins akin to the strategic petroleum reserve.
