Central Bank

South Korea Dismisses Establishing Strategic Bitcoin Reserve

Published

2 days ago

March 18, 2025

The Bank of Korea (BOK) has dismissed the possibility of establishing a strategic bitcoin reserve, citing concerns over price volatility and risks. This comes despite ongoing global discussions about using bitcoin as part of foreign exchange reserves following the United States plans to create a reserve.

In response to an inquiry from a member of the National Assembly’s Strategy and Finance Committee, the central bank rejected adding bitcoin to its reserves. BOK officials emphasized bitcoin’s wild price swings as a key deterrent, stating that transaction costs to convert bitcoin to cash “could rise drastically” if the market experiences instability.

As of March 17th, bitcoin trades around $83,500, having fallen 23% from its peak of $108,000 in January. The BOK warned that this extreme volatility poses significant risks to its reserves.

The bank also indicated that bitcoin fails to meet the International Monetary Fund’s (IMF) criteria for reserve assets. The IMF calls for prudent management of liquidity, market, and credit risks for reserves – standards bitcoin does not currently satisfy in the eyes of the BOK.

This latest stance marks the first time the South Korean central bank has directly addressed the possibility of using bitcoin as a reserve asset. It emphasized a “cautious approach” regarding bitcoin.

The dismissal of a strategic bitcoin reserve comes despite growing attention on crypto’s potential role in reserves globally. Earlier in March, U.S. President Donald Trump signed an executive order to establish a strategic bitcoin reserve. This fueled discussions in South Korea and other Asian nations about following suit.

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Bitcoin strategic reserve

Czech Central Bank Head Wants To Buy Bitcoin With 5% Reserve Allocation

Published

1 month ago

February 3, 2025

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The Czech National Bank (CNB) is contemplating a groundbreaking shift in its investment strategy by considering the allocation of up to 5% of its reserves into Bitcoin. This potential move, led by Governor Aleš Michl, could position the CNB as the first major central bank in the West to hold digital assets.

BREAKING: Czech National Bank governor says #Bitcoin “has zero correlation to bonds and is an interesting asset for a large portfolio.”
“Worth considering.” pic.twitter.com/PqwlWEbpGy
— Bitcoin Magazine (@BitcoinMagazine) January 29, 2025

Key Takeaways

The CNB may invest up to 5% of its €140 billion ($146.13 billion) reserves in Bitcoin.
Governor Michl emphasizes Bitcoin’s potential for diversification despite its volatility.
The proposal is set to be presented to the bank’s board for approval on January 30, 2025.

A Shift Towards Bitcoin

Governor Aleš Michl has expressed a desire to diversify the CNB’s asset portfolio, highlighting Bitcoin as a viable option. In an interview, he stated, “For the diversification of our assets, Bitcoin seems good.” This statement reflects a growing trend among financial institutions to explore BTC as an alternative investment.

The proposed investment could amount to approximately €7 billion ($7.3 billion) in Bitcoin, which would surpass the CNB’s current gold holdings of €4.3 billion. If approved, this allocation would represent a significant shift from traditional reserve assets, which typically include gold and U.S. dollars.

The Rationale Behind the Proposal

Several factors are driving the CNB’s consideration of Bitcoin:

Increasing Institutional Interest: The launch of Bitcoin exchange-traded funds (ETFs) by major asset managers like BlackRock has sparked renewed interest in Bitcoin as a legitimate investment.
Diversification Strategy: Michl believes that Bitcoin’s low correlation with traditional assets like bonds makes it an attractive option for diversifying the bank’s reserves.
Changing Regulatory Landscape: The recent regulatory changes in the U.S., particularly under President Donald Trump, have created a more favorable environment for cryptocurrencies, further encouraging the CNB’s exploration of Bitcoin.

Risks and Considerations

Despite the potential benefits, Michl acknowledges the inherent volatility risks associated with investing in Bitcoin. However, he remains optimistic about its long-term value, stating, “It’s possible to have a big range of outcomes, that Bitcoin will have a value of zero or an absolutely fantastic value.”

The CNB’s board will need to conduct a thorough analysis before making a final decision. Michl emphasized the importance of thoughtful consideration, stating, “The bank board decides, and no decision is imminent.”

Conclusion

The Czech National Bank’s potential move to invest in Bitcoin marks a significant moment in the evolution of central banking. If approved, this decision could pave the way for other central banks to follow suit, reflecting a broader acceptance of digital assets in the financial landscape. As the CNB prepares to present its proposal, the world watches closely to see if this bold step will redefine the role of Bitcoin in national reserves.

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