Governor Michl proposes investing 5% of reserves in Bitcoin, challenging the skepticism of traditional institutions.
According to the Financial Times, the Czech National Bank (CNB) is considering investing a portion of its reserves in Bitcoin. Governor Aleš Michl revealed his intention to present a plan to the board to diversify the bank’s portfolio, which could see up to 5% of reserves (equivalent to $146 billion) allocated to Bitcoin. The investment could amount to around $7.3 billion.
Emphasizing his background as a fund manager, Michl stated:
“For the diversification of our assets, bitcoin seems good. Of course, if you compare my position with other bankers, then I’m the one entering the jungle, or the pioneer.”
The CNB’s internal analysis revealed that if the bank had maintained 5% of its foreign reserves in Bitcoin over the last decade, annual returns would have increased by 3.5%, despite a doubling of volatility. Michl acknowledged the risks, admitting:
“It’s possible to have a big range of outcomes, that bitcoin will have a value of zero or an absolutely fantastic value.”
The CNB’s stance contrasts with that of other central banks. The Federal Reserve has confirmed it does not hold Bitcoin, while the Bundesbank recently compared the cryptocurrency to “digital tulips,” referencing the 17th-century speculative bubble. The ECB was even more critical, stating last year that “the fair value of Bitcoin is still zero.”
Michl predicts that other central banks may follow the CNB’s example in the next five years, following the trend of pension funds and commercial banks that have started including digital assets in their portfolios. He also emphasized that such an investment by a central bank could significantly influence the price of Bitcoin:
“Five per cent [of our assets] is a lot of money, even for the bitcoin market.”
