The Czech National Bank (CNB) could become the first central bank in Europe to invest in Bitcoin (BTC) as part of its foreign reserve diversification strategy, according to a report by the Financial Times.
CNB Governor Aleš Michl has announced plans to propose Bitcoin purchases during a board meeting on January 30.
If approved by the seven-member policy panel, the move would mark a historic shift in Western central bank policy, as most have remained skeptical about cryptocurrencies.
Bitcoin Could Represent Up to 5% of National Reserves
The Czech Republic’s total foreign reserves stood at $146 billion as of December 2023, making them one of the largest in the world relative to the country’s economy. Michl’s plan could allocate up to 5% of these reserves into Bitcoin , potentially amounting to an investment of more than $7.3 billion.
“For the diversification of our assets, Bitcoin seems good,” Michl said in the interview.
A Shift in Strategy for the Czech National Bank
This proposal marks a notable change in stance from Michl, who earlier this year stated that while he had considered purchasing some Bitcoin, he was not planning a significant investment. Now, citing Bitcoin’s increasing mainstream acceptance—particularly following the launch of Bitcoin exchange-traded funds (ETFs) by major firms like BlackRock—Michl appears to be moving toward a larger commitment.
Despite acknowledging Bitcoin’s “extreme volatility”, the governor argues that it could play a role in a broader diversification strategy, alongside increased holdings of gold and stocks. The CNB has already set a goal to expand its gold reserves to 5% of total assets by 2028.
Potential Market Impact
If the Czech central bank proceeds with Bitcoin purchases, it could significantly impact the crypto market. Analysts note that an investment of this scale would be equivalent to nearly 5.3 months of Bitcoin’s newly mined supply, potentially influencing liquidity and demand.
This move, if approved, could set a precedent for other European central banks, signaling a shift toward institutional acceptance of Bitcoin as a reserve asset.
