Key Takeaways
- The governor emphasised the bank’s focus remains on gold as a primary reserve asset.
- Any decision to proceed would require the approval of the bank’s seven-member Board of Directors.
The Czech National Bank (CNB) is exploring the possibility of including Bitcoin in its foreign exchange reserves as part of a diversification strategy. Governor Aleš Michl recently mentioned that acquiring a small amount of Bitcoin has been discussed, though no concrete plans have been made. Any decision to proceed would require the approval of the bank’s seven-member Board of Directors.
Michl described the consideration as an idea rather than a finalized strategy, stating, “Bitcoin is on my mind.” However, he emphasized that the bank’s focus remains on gold as a primary reserve asset. Currently, the CNB holds approximately 50 tons of gold and aims to double this amount to 100 tons by 2028, which would represent 5% of the bank’s total assets. Gold, Michl noted, offers reliability, especially in uncertain economic times.
Bitcoin’s strong performance in recent years has sparked interest in its potential as a reserve asset. In 2024, Bitcoin’s value rose by over 128%, compared to a 31% increase in gold prices. While this growth has made Bitcoin an attractive option for some, Michl cautioned about its volatility, calling it a “double-edged sword” due to its potential for both significant gains and substantial risks.
Experts have suggested that Bitcoin’s inclusion in central bank reserves could be used to hedge against inflation. Blockchain specialist Anndy Lian remarked that Bitcoin could introduce a more digital and decentralized approach to managing economic stability.
“If Bitcoin becomes a staple in national reserves, it could fundamentally change the global financial landscape,” Lian commented. However, he also warned of the potential financial swings that Bitcoin’s price volatility could bring to national reserves.
Globally, the idea of Bitcoin as a reserve asset is gaining momentum. In the United States, the Bitcoin Act, proposed by Senator Cynthia Lummis, seeks to establish a strategic Bitcoin reserve.
The proposal has received bipartisan support, with states like Pennsylvania and Texas considering similar measures. US President-elect Donald Trump has also expressed interest in BTC as a strategic asset. Swiss National Bank is also considering incorporating BTC into its national reserves, alongside traditional assets such as gold.
For now, the CNB is taking a cautious approach. Adviser Janis Aliapulios clarified that the bank has no immediate plans to invest in Bitcoin but is open to future discussions. “The CNB is not currently considering purchasing crypto assets for its reserves,” Aliapulios stated. Meanwhile, the bank stated that it remains committed to its gold diversification strategy, with plans to increase gold holdings in the coming years.
Michl also highlighted broader economic concerns, pointing to the Czech Republic’s fiscal deficit and high money supply as key inflationary risks. “A balanced budget is the best way to fight inflation,” he said.
