Bitcoin under consideration for inclusion in Czech National Bank’s reserves
The Czech National Bank (CNB) is studying the integration of bitcoin into its reserves as part of a diversification strategy initiated two years ago by Governor Aleš Michl.
A potential 5% allocation in bitcoin, equivalent to approximately 7 billion euros, could enhance annual returns, although it would double the volatility of CNB’s portfolio.
If adopted, CNB would become the first central bank to officially hold bitcoin, but the decision is still pending risk and benefit analyses.
A strategic diversification of reserve assets
The board of directors of the Czech National Bank has approved a proposal to study the integration of new asset classes, including bitcoin, into its reserves. This initiative, led by Governor Aleš Michl, is part of a diversification strategy that has been ongoing for two years. The goal is to assess whether a bitcoin allocation could improve the overall yield of the bank’s reserves while measuring the associated risks.
A possible 5% allocation in bitcoin
In an interview with the Financial Times, Aleš Michl revealed that he would submit a plan to allocate up to 5% of the bank’s reserves, approximately 7 billion euros, into bitcoin. According to CNB’s estimates, such an allocation over the past decade would have increased annual returns by 3.5%, although doubling the portfolio’s volatility.
Michl acknowledges the risks associated with bitcoin’s volatility, but also highlights the growing interest from institutional investors in this asset, especially since the launch of Bitcoin Spot ETFs by BlackRock and other asset managers. He also points to the evolution of US policies, with Donald Trump’s promises of crypto deregulation and the establishment of a strategic stock of bitcoins.
A pioneering approach among traditional central banks
If CNB were to validate this allocation, it would become the world’s first central bank to officially hold bitcoin. Michl fully embraces this bold position:
Compared to other central bankers, I am the one entering the jungle, a pioneer.
As a former investment fund manager, he takes a profitability-focused approach, contrasting with the traditional caution of his counterparts.
However, he remains aware of the uncertainties surrounding this decision. He recognizes that this strategy could be followed by other central banks in the next five years, but also does not rule out the possibility that the investment could turn out to be a complete failure.
A decision still pending
Upon proposal from Governor Aleš Michl, CNB will assess whether it would be appropriate, in terms of diversification and yield, to include other asset classes in the reserves.
No final decision has been made yet regarding the integration of bitcoin into CNB’s reserves. The board of directors will analyze the study’s results before deciding on any allocations. Any changes will be reflected in the bank’s quarterly and annual reports.
