Czech Central Bank Governor Aleš Michl announced a plan to invest up to 5% of national reserves in Bitcoin. The proposal, which will be presented to the bank's board on 30 January, marks a step change towards the adoption of cryptocurrencies by traditional financial institutions.
Regardless of the outcome, it is a sign of openness towards crypto assets, in the wake of what is happening in the US with Donald Trump. The Czech central bank would be the first western central bank to hold cryptocurrencies.
This is evidenced by the fact that Governor Michl emphasised the importance of diversifying the bank's assets, citing increased investor interest and institutional adoption of Bitcoin as key motivations for this initiative.
What we are talking about
Five per cent of national reserves amount to EUR 7 billion at the current Bitcoin exchange rate. The main concern of observers concerns the volatility of BTC. Traditionally, central banks have preferred to invest in assets deemed more stable such as gold and US bonds.
However, Michl noted that recent market turbulence has challenged the idea that traditional assets are inherently more stable. He said that increasing adoption by institutions and governments will help stabilise the price of Bitcoin over time.
Implications for the future
Michl also suggested that other central banks may follow suit in the coming years as interest in cryptocurrencies continues to grow.
