The move will help to diversify the country’s reserves, according to Ales Michl
The governor of the Czech National Bank (CNB), Ales Michl, wants to invest a substantial amount of the country’s reserves in Bitcoin, the Financial Times reported on Wednesday. The value of the world’s most popular cryptocurrency hit a new record earlier this month following the inauguration of crypto-friendly US President Donald Trump.
Michl told the FT that he will present a proposal to the CNB’s board on Thursday, to invest up to 5% of the central bank’s €140 billion ($145 billion) reserves in crypto.
“For the diversification of our assets, Bitcoin seems good,” Michl told the publication.
The FT has described the potential move as “groundbreaking” and noted that the CNB could become the first Western central bank to hold crypto assets.
“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,” Michl added.
The banker also acknowledged the asset’s volatility, saying he was “ready” for a possible Bitcoin collapse.
Central banks traditionally hold their reserves in conservative assets such as US Treasuries and other forms of high-yield debt. Some have holdings in stocks, but almost none have publicly ventured into cryptocurrencies, the FT noted.
Bitcoin hit a new record high this month after Trump was sworn in, surpassing $109,000. Days into his term, the new US president signed an executive order establishing a working group to explore the creation of a national digital asset stockpile.
Last year, the value of Bitcoin more than doubled, thanks partially to the approval of trading of spot Bitcoin exchange-traded product (ETP) shares by a US regulator.
According to Michl, more central banks could follow his lead within the next five years, as several funds and commercial banks have started investing in crypto.
Larry Fink, CEO of investment company BlackRock suggested recently that if institutions allocate between 2% and 5% of their portfolios to Bitcoin, its price could reach $700,000.
Introduced in 2009, Bitcoin enables peer-to-peer transactions over the internet without the need for traditional banking systems. Its decentralized nature appeals to those seeking alternatives to government-backed currencies. However, this same feature has allegedly made it attractive for illicit activities, including money laundering and terrorist financing.
Bitcoin’s value is influenced by factors such as supply and demand dynamics, market availability, competition from other cryptocurrencies, and investor sentiment.
Despite its growing use in commerce, Bitcoin operates in a regulatory gray area, with no uniform international laws governing its use.
El Salvador adopted Bitcoin as an official currency in 2021, although many governments remain cautious, warning about the risks associated with investing in such a volatile asset.
