Czech Republic's central bank to assign part of reserves to Bitcoin

If the central bank continues with this initiative, it could invest nearly EUR 7 billion in Bitcoin while potentially influencing financial institutions' overall view on digital assets. According to Financial Times, the current Governor of the Czech National Bank, Aleš Michl, intends to present a strategy to the board to invest in Bitcoin to diversify the CNB’s reserves. If his plans are approved by the board, the central bank could hold approximately 5% of its EUR 140 billion of reserves in Bitcoin. At the same time, the Governor acknowledged the cryptocurrency’s volatility and limited record, however, he underlined the scaling investor interest in Bitcoin since several companies introduced Bitcoin exchange funds in 2024.

How could Bitcoin improve the central bank’s reserve management?

The Governor of the CNB has expressed interest in modernising the central bank’s reserve management strategy. Conventionally, financial institutions leverage low-risk investments such as US government bonds due to their ability to simplify the process of obtaining loans and stimulating economic growth. Yet, the Governor, who has a background in investment, considers Bitcoin a viable alternative, with this asset class having the potential to provide high returns.

Furthermore, throughout 2024, Bitcoin achieved substantial traction despite its price variations remaining at the extremes. Financial institutions also started to present interest in Bitcoin, with major financial organisations integrating Bitcoin as part of their portfolios. If the central bank moves forward with its initiative, Bitcoin’s role as a reserve asset could be further validated and more financial institutions could reconsider their stance on it.

At the same time, the CNB’s Governor has steadily supported maintaining control over the Czech Republic’s monetary policy, with him underlining that an independent monetary framework enables the region to manage inflation and adapt to global economic changes. Additionally, including Bitcoin in the CNB’s reserves falls in line with this strategy by integrating a non-traditional asset that runs outside centralised financial systems.