The head of the Czech National Bank intends to propose investing billions of euros from the country's reserves into bitcoin, potentially making it the first Western central bank to hold cryptocurrency assets.
Investment Proposal
Governor Aleš Michl will present a plan to allocate up to 5 percent of CNB's €140 billion reserves to bitcoin at the upcoming board meeting.
Context and Justification
Michl explained that asset diversification could enhance returns. CNB analyzes indicated that if 5 percent of reserves had been in bitcoin over the past decade, annual returns would have increased by 3.5 percentage points, albeit with doubled volatility. The launch of bitcoin ETFs by firms like BlackRock also contributed to Michl's decision.
Global Reaction and Future
Other central banks remain cautious with bitcoin. The Federal Reserve does not hold cryptocurrency, viewing it as unsuitable for investment. Michl predicts that within five years, other central banks might follow CNB's move, as seen with commercial banks and pension funds.
If the proposed plan is approved, the Czech Republic may set a pioneering example in using cryptocurrency within state reserves, potentially setting a new precedent for other nations.
