Bitcoin is making waves in global financial markets, but not all central banks support its inclusion as a reserve asset.
Why are banks considering it?
Bitcoin is recognized not just as a digital currency but as a store of value similar to gold. Some financial leaders see it as protection against inflation and market instability. Lawmakers in Texas, Utah, and Arizona have proposed establishing Bitcoin reserve assets. Coinbase CEO Brian Armstrong has advocated for nations to start acquiring this digital asset.
Why is the ECB against it?
According to Lagarde, central bank reserves need to maintain liquidity and reliability. Bitcoin's decentralized nature introduces volatile market conditions, making it unsuitable for reserves. The ECB prefers stable assets like government bonds and foreign currencies.
The Bigger Picture
The discussion extends beyond the European Union. President Donald Trump recently formed a committee to explore national digital reserves. This move has prompted governments around the world to reassess their stance on digital assets. El Salvador is one of the first countries to build national Bitcoin reserves.
Bitcoin is challenging central banks to reconsider their financial operations. However, Lagarde believes it won’t become part of the ECB’s reserves. Meanwhile, governments continue to explore the potential roles of digital assets in national economies.
