Czech central bank governor proposes $7B Bitcoin reserve shift
Czech central bank proposes Bitcoin reserve
In a groundbreaking proposal, Czech National Bank (CNB) Governor Aleš Michl has announced plans to allocate up to 5% of the country’s foreign exchange reserves—approximately €7 billion ($7.5 billion)—to Bitcoin.
If approved, the move would make the CNB the first Western central bank to invest directly in the cryptocurrency, according to the Cryptopolitan.
Michl’s proposal, reported by the Financial Times, will be presented to the central bank’s board on Thursday. He argues that Bitcoin offers a viable diversification strategy amid growing institutional adoption, citing investment giant BlackRock’s embrace of Bitcoin exchange-traded funds (ETFs) as a sign of mainstream acceptance.
A departure from traditional central banking
Historically, central banks have limited their reserves to conservative assets such as U.S. Treasuries and highly rated bonds. Some have experimented with equities, but few have ventured into cryptocurrency. The European Central Bank (ECB) has been particularly critical, arguing that Bitcoin has no inherent value. Bundesbank Governor Joachim Nagel recently compared it to the speculative 17th-century tulip mania.
Michl, however, sees Bitcoin differently. A former investment fund manager, he believes the digital asset can enhance long-term returns. According to CNB estimates, a 5% Bitcoin allocation over the past decade would have increased annual returns by 3.5 percentage points, albeit with double the volatility.
Despite skepticism from European financial institutions, Michl predicts that more central banks will explore cryptocurrency investments in the coming years. “It’s a matter of time,” he said.If approved, the Czech Republic’s bold move could mark a turning point in how central banks perceive and utilize digital assets.
Recently, Binance has secured a securities brokerage license from Brazil’s Central Bank, becoming the first crypto platform to receive such authorization. This milestone strengthens its position in Brazil’s growing cryptocurrency market.
