Czech central bank destroys Bitcoin to diversify foreign exchange reserves

Key Takeaways

CNB Governor Aleš Michl is considering Bitcoin for his foreign exchange reserve strategy.
The CNB is currently targeting gold to achieve low inflation and financial stability.

Czech National Bank (CNB) Governor Aleš Michl has considered accepting Bitcoin as part of the bank's foreign exchange reserve diversification strategy, although there are no immediate construction plans.

“I have Bitcoin in my head but our strategy now is low inflation, financial stability,” Michl said in a statement an interview with Partie Terezia Tománková on CNN Prima News.

The CNB is currently focusing on traditional assets such as gold, stocks and bonds, which make up the majority of the bank's resources, according to Michl. The governor noted that he was considering buying “a few Bitcoins” rather than making large investments.

“I considered Bitcoin but there are seven of us on the bank's board. I think there will be enough gold now but we can continue to talk about it,” said Michl.

He called Bitcoin a “very interesting asset” but pointed to the uncertainty surrounding its underlying technology.

The CNB currently holds 50 tonnes of gold and plans to double its holdings to 100 tonnes over the next three and a half years.

“We'll have 30% stock, we'll have bonds, we'll have cash deposits, and we'll have gold. So that's it,” Michl discussed the bank's reserve strategy.

Bitcoin has gained 131% over the past year, outperforming gold's roughly 30% rise, according to TradingView data.

Several countries have investigated Bitcoin conservation initiatives. Last November, Eros Biondini, a Brazilian lawmaker proposed the establishment of a national Bitcoin reserve to support Brazil's economic defenses against currency volatility and geopolitical threats.

Last month, Japanese lawmaker Satoshi Hamada questioned the government about establishing a national Bitcoin reserve, while Russia's State Deputy Anton Tkachev urged a similar consideration.

Vancouver City Council recently approved a “Bitcoin-friendly” move that involves changing part of its financial resources.

In North America, several US states including Texas, Alabama, and Pennsylvania have moved toward Bitcoin reserve accounts. The US is expected to soon see a national campaign led by Trump.

Although the Czech central bank has no immediate plans to buy Bitcoin, the country is taking major steps to create a more favorable environment for crypto investment.

The recent Czech Parliament agree to change capital gains tax exemption on Bitcoin and other crypto assets held for more than three years. This move aligns with EU regulatory frameworks and aims to encourage participation in the crypto market.