South Korea Avoids Bitcoin Reserve Creation

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by Giorgi Kostiuk

a year ago

South Korea, unlike some countries, is not considering including bitcoin in its foreign reserves. The Bank of Korea has expressed its stance, citing several reasons against the proposal made by lawmakers and experts.

Bank of Korea's Position

According to the local media Korea Economic Daily, the Bank of Korea has officially stated its lack of intention to include bitcoin in reserves. This statement was a response to a written inquiry by Representative Cha Gyu-Geun. The bank referred to the high volatility of cryptocurrency, which could lead to significant financial risks during sales. In March, the main argument was the price fluctuations from $109,000 to $76,700.

Bitcoin Fails IMF Standards

The Bank also mentioned that bitcoin does not meet the International Monetary Fund's standards for reserves. The standards require assets to have an investment grade rating, liquidity, marketability, and be expressed in a convertible currency. According to the bank, bitcoin does not meet these requirements.

It is known that some countries, such as the Czech Republic and Brazil, have expressed positive opinions, but the European Central Bank, the Swiss National Bank, and the Japanese government have expressed negative opinions.None

Reactions and Prospects

The Bank of Korea's response came after numerous requests from South Korean financial experts and Democratic Party lawmakers. These requests intensified as the US president discussed creating a strategic digital asset stockpile.

South Korea takes a cautious stance on cryptocurrency assets in foreign reserves, citing their volatility and failure to meet IMF criteria. While some countries show a positive attitude, the majority of central banks are not yet inclined to experiment with bitcoin as a reserve asset.

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