The Czech National Bank (CNB) may become the first European central bank to invest in Bitcoin as part of its diversification strategy for the country’s foreign exchange reserves.
Governor Aleš Michl told the Financial Times that he would present a plan to the board to invest in bitcoin as a way of diversifying the CNB’s reserves at a meeting on Thursday.
“For the diversification of our assets, bitcoin seems good,” Michl said in an interview.
“Those [Trump] guys can now kind of create some bubble for bitcoin, but I think the trend would be an increase without those guys as well, because it’s an alternative [investment] for more people.”
Should the board approve this, then the CNB could eventually hold as much as 5 per cent of its €140bn of reserves in bitcoin, he said.
CoinTelegraph reports that the news comes three weeks after Michl said he was looking at Bitcoin as a potential reserve asset and was considering acquiring “a few Bitcoin” for diversification.
Central banks have traditionally parked their reserves in conservative assets such as US Treasuries and other forms of highly rated bonds.
Some have holdings in equities, but almost none have publicly ventured into crypto.
Michl said he had “a totally different philosophy” about bitcoin to his counterparts.
“Of course, if you compare my position with other bankers, then I’m the one entering the jungle, or the pioneer,” Michl said.
“I used to run an investment fund, so I’m a typical investment banker I would say, I like profitability.”
Michl said more central banks could follow his lead within the next five years, just as several funds and commercial banks had recently changed tack and added crypto to their portfolios. Some pension funds have begun investing in crypto.
Of course, Fed and ECB officials have warned about the risks of investing in cryptocurrencies, with the latter writing last year that “the fair value of bitcoin is still zero”, adding that “bitcoin is not suitable as means of payment or as an investment”, while former ECB official Benoît Cœuré has previously referred to bitcoin as the “evil spawn of the financial crisis”.
Federal Reserve chair Jay Powell confirmed in December that the US central bank did not hold any bitcoin as it was not in the list of assets Congress allowed it to purchase. “We are not looking for a law change at the Fed,” Powell said at the time.
Of course, that has all changed since Trump’s election and the potential passing of Senator Lummis’ Strategic Bitcoin Reserve bill. Meanwhile, Arizona lawmakers have advanced a Bitcoin strategic reserve bill, which seeks to deploy the world’s first cryptocurrency as a savings technology for the state.
Tyler Durden
Wed, 01/29/2025 – 13:50
