Governor Ales Michl suggests investing in Bitcoin to diversify the Czech National Bank's reserves, marking a historic shift in central bank strategies.
The Czech National Bank may become the first Western central bank to invest in Bitcoin, as Governor Ales Michl proposes allocating 5% of reserves to crypto. Image: ChicHuePrague, Czech — February 6, 2025:
The Governor of the Czech National Bank (CNB), Ales Michl, has proposed a groundbreaking plan to invest a portion of the country's foreign reserves in Bitcoin, according to the Financial Times. The proposal, which will be presented to the CNB board on Thursday, suggests allocating up to 5% of the bank's €140 billion ($145 billion) reserves into the world’s leading cryptocurrency.
Michl emphasized the importance of diversifying the country’s assets, citing Bitcoin as a promising option. The plan, if approved, would make the CNB the first Western central bank to hold cryptocurrency assets. The move comes as Bitcoin reached new record highs this month, surpassing $109,000, fueled partly by the crypto-friendly policies of US President Donald Trump, who took office earlier this year.
Despite Bitcoin's notorious volatility, Michl expressed confidence in its potential, stating, “Bitcoin seems good for diversification,” and added he was prepared for any potential downturns in the cryptocurrency's value.
Central banks traditionally hold their reserves in safer assets like US Treasuries, and very few have ventured into cryptocurrencies. However, Michl believes that more central banks could follow suit in the coming years, as institutional interest in digital currencies grows. The investment proposal aligns with the broader trend of financial institutions exploring crypto, with BlackRock CEO Larry Fink predicting that Bitcoin could hit $700,000 if institutions invest 2% to 5% of their portfolios in the asset.
Bitcoin’s decentralized nature has sparked both excitement and caution, with critics highlighting its association with illicit activities such as money laundering and terrorism financing. However, as adoption continues to grow, Bitcoin's status remains in a regulatory gray area, and it has yet to be universally accepted as a mainstream currency.
Despite these concerns, Michl’s proposal could signal a major shift in how central banks view cryptocurrency as part of their reserve management strategies.