Czech Finance Minister opposes central bank’s Bitcoin investment plan

Czech Finance Minister Zbynek Stanjura has raised his concern about the central bank governor’s suggestion to explore the possibility of investing some of the country’s foreign currency reserves in Bitcoin.

While acknowledging the Czech National Bank’s independence and the government’s inability to intervene in its decisions, Stanjura voiced concerns that Bitcoin’s high volatility could make it an unsuitable asset for reserve holdings.

Czech National Bank considers Bitcoin investment as part of reserve diversification strategy

Czech Finance Minister’s remarks followed Governor Aleš Michl’s suggestion to consider investing billions of euros from the central bank’s reserves in cryptocurrency.

Governor Aleš Michl said on Wednesday that if approved, the Czech National Bank could eventually hold as much as 5% of its 140 billion euro ($146 billion) reserves in Bitcoin.

Since taking over the Czech National Bank in 2022, Michl has focused on diversifying the institution’s substantial reserves by slowly building up gold holdings and investing a more significant part of the portfolio in equities that can produce steady profits in the long run.

If Bitcoin is implemented in its reserves, this could be the first shift into cryptocurrency by a Western central bank.

Later, in a post on X, Michl clarified that no immediate decision was imminent, emphasizing that the central bank would first thoroughly evaluate the proposal’s merits and feasibility. He noted:

Czech National Bank’s goal is price stability. When we took office in July 2022, inflation was 17.5%. We brought it down to target. We are also diversifying reserves—gradually increasing gold holdings from 0% to around 5% and planning for 30% in equities.

~ Aleš Michl

The Czech National Bank Governor said that BTC has no relation to bonds, but it is still quite interesting to include it in the portfolio at the moment. He also stressed that the discussion is still in the early stages.

Czech central bank plans further Bitcoin assessment amid global skepticism

As for Bitcoin’s volatility, Michl said that this is the main reason it is difficult to use the digital asset as a reserve asset despite the diversification benefit. He noted he would tell the central bank’s team on Thursday to carry out a more detailed analysis of the potential of BTC in the reserves, stressing that this is just the first step.

Swiss cryptocurrency advocates recently launched an initiative to make the Swiss National Bank (SNB) hold BTC and gold in its reserves. The SNB has expressed skepticism about holding Bitcoin as a reserve.

Policymakers at the European Central Bank have consistently rejected Bitcoin as a potential reserve asset, often comparing it to the tulip mania of the 17th-century Netherlands.

Also, last week on a Davos panel, South Africa’s central bank Governor ripped into the idea of a BTC stockpile, arguing that crypto industry lobbyists shouldn’t be allowed to dictate what assets governments own.