Key Takeaways
The Czech National Bank is considering a Bitcoin test portfolio to better understand the digital asset.
The CNB chief emphasizes studying Bitcoin as a high-risk asset and its underlying technology.
The Czech National Bank (CNB) Governor Aleš Michl called for central bankers to study Bitcoin and its underlying technology. Michl differentiated Bitcoin from other crypto assets, asserting that examining Bitcoin will only be beneficial, not harmful.
“[Bitcoin] should not be lumped together with other crypto assets. We central bankers should study it and explore the technology it is built on. Studying bitcoin won’t harm us—on the contrary, it will strengthen us,” Michl shared in a Wednesday statement on X.
Last month, the CNB initiated a review process to consider incorporating Bitcoin into its international reserves management strategy. The move is part of the bank’s strategy to diversify its $7 billion reserve portfolio.
Michl, leading the initiative, said in an interview earlier in January that he considered adopting Bitcoin for the CNB’s foreign exchange reserve strategy. However, the bank’s head also noted that their focus is on assets that offer “low inflation” and “financial stability.”
Further explaining his rationale in today’s post, the CNB governor stated that the initiative aims to gain hands-on experience with Bitcoin, adapt to evolving financial landscapes, and investigate alternative reserve management strategies.
Michl warned that Bitcoin’s value could eventually reach one of two extremes: “either zero or a huge amount.”
“I also stressed that bitcoin is a high-risk asset for professional investors who are aware of all the risks,” Michl stated, stressing that the analysis is just the beginning—no investment decisions will be made until it is complete and the board makes a final decision.
Addressing the crypto asset market, Michl strongly advised extreme caution, comparing the current market to the early days of capitalism in the 1990s. He urged investors to only invest in what they understand and “are willing to accept the risk of potentially losing” their entire investment.
The CNB’s potential investment in Bitcoin could position the bank as the first major Western central bank to hold digital assets in its reserves. However, the plan faces criticism from the Finance Minister due to Bitcoin’s volatility.
