ECB against Bitcoin reserves: Fatal mistake for Europe

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ECB against Bitcoin reserves

Lagarde vs. Bitcoin

Last week, the President of the European Central Bank (ECB), Christine Lagarde, stated that Bitcoin is not suitable for central bank reserves in the eurozone. According to her, government reserves must be liquid, reliable, and safe, and Bitcoin does not possess these qualities. Therefore, it has no future in Europe: "I am confident that Bitcoin will not be included in the reserves of any EU central bank."

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Lagarde has held this position for a long time. For example, in January 2021, she called Bitcoin a "highly speculative asset" that requires strict global regulation to combat financial crimes.In May 2022, the ECB chief called for market regulation, stating that cryptocurrencies "are worth nothing," and admitted that she personally holds a "low opinion of digital assets."

But why is the head of the European regulator so radical when it comes to Bitcoin? The reason lies with her son. In an interview, Christine Lagarde admitted that her son lost "almost everything" due to investments in cryptocurrencies. Initially, he ignored her warnings, but after losing 60% of his total funds, he acknowledged that his mother was right.

Since then, Lagarde has been leading a "crusade" against Bitcoin and cryptocurrencies, seeking, if not an outright ban, then at least strict regulatory constraints on their operation.

Czech Republic’s crypto initiatives

However, not everyone in Europe is blindly following Christine Lagarde’s stance. In particular, the Governor of the Czech National Bank (CNB), Aleš Michl, believes that Bitcoin can be an excellent tool for diversifying national reserves. The CNB is even prepared to allocate up to 5% of its assets to BTC, which currently amounts to around €140 billion.

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The central bank chief acknowledges that Bitcoin remains a risky and volatile asset. However, due to increasing demand from spot Bitcoin ETFs, it is also proving to be an extremely promising asset.

"Different outcomes are possible: from a decline to a sharp rise in BTC. But we have already invested in Enron and Wirecard stocks, so we have experience with high-risk investments. I am prepared for any scenario," the central bank chief noted.

Aleš Michl predicts that in the next five years, many central banks will acquire their first Bitcoin holdings. Meanwhile, many major institutional firms and pension funds are already actively accumulating BTC.

U.S. Bitcoin plans

Why is the Czech National Bank governor so confident in Bitcoin’s potential? The answer lies across the ocean—during his election campaign, the new US president, Donald Trump, promised to add Bitcoin to the national reserves.

This pledge not only pushed Bitcoin’s price to $100,000 but also triggered a wave of regulatory initiatives across the country. As of today, 22 US states have already introduced bills to create Bitcoin reserves.

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Just yesterday, Donald Trump’s special advisor on AI and cryptocurrencies, the so-called "Crypto Czar" David Sacks, stated that creating a national Bitcoin reserve is a top priority for the US government. Therefore, everything indicates that the new president will indeed follow through on his plan.

Which countries have Bitcoin reserves?

As of today, only one country in the world officially holds a national Bitcoin reserve—El Salvador. Since November 2022, the country has been adding 1 BTC to its holdings daily and has already accumulated more than 6,000 Bitcoins. Legislatively, the countries closest to creating Bitcoin reserves, apart from the US, are Brazil and Switzerland.

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Additionally, several countries that already hold Bitcoin could establish a Bitcoin reserve. These include China, the United Kingdom, Ukraine, and Bhutan. However, this would require the political will of their leadership, which they might express only after the US makes its final decision.

Countries Holding Bitcoin. Source: Bitcoin Treasuries

Conclusion

Against the backdrop of global trends, the European Central Bank’s refusal to create Bitcoin reserves appears to be a strategic mistake. El Salvador, the US, the Czech Republic, and other countries clearly recognize Bitcoin’s potential as a reserve asset, whereas Christine Lagarde’s position remains conservative and largely subjective.

Many central banks are willing to experiment, understanding that digital assets are playing an increasingly crucial role in the global economy. The US has already effectively incorporated Bitcoin into its strategic plans, and this could be a turning point for other nations.

If the EU continues to ignore this trend, it risks losing its competitiveness in the financial markets of the future, where Bitcoin is becoming not just a popular tool for asset diversification but a new global reserve currency.

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