The Bank of Korea has reaffirmed its stance against including Bitcoin in its reserves, citing the cryptocurrency’s high volatility. This statement comes amid global discussions about Bitcoin’s role in national reserves.
Bitcoin Deemed Too Volatile for National Reserves
The Bank of Korea cited extreme price fluctuations as a primary reason for excluding Bitcoin from its foreign exchange reserves. The institution emphasizes stability as a key factor in selecting reserve assets, and Bitcoin's unpredictable nature does not align with these criteria.
Political Inquiry into Bitcoin’s Reserve Status
Members of South Korea’s Democratic Party formally requested clarification on the central bank’s position on Bitcoin reserves, sparking fresh discussions about whether the country should follow global trends in digital asset adoption. Despite this, the Bank of Korea has reaffirmed its cautious approach, prioritizing traditional assets like foreign currencies, gold, and government bonds.
Global Central Banks Remain Divided on Bitcoin Reserves
South Korea’s decision aligns with other major central banks. In January, Christine Lagarde, President of the European Central Bank, dismissed adding Bitcoin to reserve portfolios. While some financial leaders advocate Bitcoin as a hedge against economic instability, most major central banks remain skeptical about regulatory uncertainty and market volatility.
The debate over Bitcoin's place in national reserves is far from over. While the U.S. takes initial steps to accumulate crypto assets, conservative financial institutions like the Bank of Korea stick to traditional investment strategies.
