Should European banks consider holding cryptocurrencies like Bitcoin as a reserve asset?
The Czech National Bank (CNB) recently launched an investigation into whether to invest in cryptocurrency or other digital assets.
The CNB said the bank would consider creating a Bitcoin test portfolio to "learn about and try out this highly risky alternative asset," as part of its ongoing diversification.
"Bitcoin is highly volatile and could one day be worth one of two extremes - either zero or a huge amount," Ales Michl, the bank’s governor, said in the statement.
Still, Michl said in a post onX that cryptocurrency is worth considering because it's not tied to bond prices and remains an "interesting asset for a large portfolio".
CNB is the first European central bank to evaluate crypto as a potential reserve asset, experts told Euronews Next. Could that change?
The role of a central bank is to manage a country's currency and control the money supply in circulation.
According to Matthias Bauer-Langgartner, Chainalysis’ head of policy for Europe, the banks also hold on to reserve assets as "effective tools" to help them establish monetary policies in their country.
Teunis Brosen, head of regulatory analysis at banking corporation ING, said central banks are generally very "conservative" with their investments by keeping a mix of government bonds, gold, cash, and selected foreign currencies.
Brosen and Bauer-Langgartner said the goal is stability and keeping assets liquid, so they can be sold quickly if needed. The banks also want to project an image of being strong and solid in case of an attack on the nation’s currency.
Not-so-stable crypto assets like Bitcoin that see major price and profit fluctuations are “at the other end of [that] asset spectrum,” Brosen said.
The value of Bitcoin has skyrocketed over 900 per cent
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