Czech National Bank Considers Bitcoin for Foreign Reserves

The Czech National Bank (CNB) is exploring the possibility of adding Bitcoin to its foreign reserves, a move that shows how central banks are starting to take digital currencies seriously. Governor Aleš Michl recently revealed that the idea of buying a small amount of Bitcoin is being discussed, which has caught the attention of many. This comes as Bitcoin recently crossed $102,000, its highest level in three weeks.

Governor Michl’s Proposal

In a live interview on CNN Prima News’ Partie Terezie Tománková program, Michl shared the idea of including Bitcoin in the bank’s reserves. However, he made it clear that this is just a proposal for now, and any decision to buy Bitcoin would need approval from the CNB’s seven-member Board of Directors.

Michl emphasized that this isn’t a plan for large-scale investment, stating, “Bitcoin is on my mind,” which indicates that the idea is still in early discussions.

While Bitcoin is being considered, the CNB still sees gold as the main asset for its reserves. The bank currently holds 50 tons of gold, with plans to double this to 100 tons by 2028. This would make gold 5% of the bank’s total assets.

Michl explained that gold is a stable and trusted asset, especially in uncertain global markets.

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Bitcoin’s Performance: High Potential, High Risk

Bitcoin’s performance in 2024 has certainly made it an attractive option. Its value has risen by over 128% this year, while gold has increased by just 31%. This impressive growth makes Bitcoin a compelling choice for diversifying reserves.

However, Bitcoin’s price is known for its volatility. Michl referred to this as a “double-edged sword,” meaning it can offer both rewards and risks.

If central banks like the CNB begin holding Bitcoin, it could change the way reserves are managed globally. Blockchain expert Anndy Lian pointed out that Bitcoin could lead to a more digital and decentralized system for ensuring financial stability.