Central banks are under more and more pressure to include digital currencies in their portfolios as they become more popular worldwide. The Czech National Bank (CNB), on the other hand, is still wary of Bitcoin. Board member Jan Kubicek expressed doubts about its usefulness. His worries are mainly about the unknowns in the law and the fact that Bitcoin is volatile, which makes it a problematic asset for a national bank to handle. Even though CNB Governor Ales Michl started the first talks, the bank is still looking into possible asset expansions but is still unsure if it wants to accept Bitcoin.
Legal and regulatory issues
Kubicek emphasized that Bitcoin’s legal standing is still unclear, which makes it harder to incorporate into the CNB’s reserve system. Accounting and reporting would change a lot if you held Bitcoin.
Bitcoin Volatility Concerns
Another important problem that Kubicek brought up is the huge changes in Bitcoin’s price. He said it’s not clear if Bitcoin’s volatility will follow past patterns, especially if more big buyers start to use it. Because it is hard to predict, it is hard to figure out how much it will be worth on the market in the future, which is a very important thing for central banks to consider when choosing reserve assets.
Reserve Asset Alternatives
Bitcoin is still not a likely option, but the CNB is looking into other types of assets. International corporate bonds, technology-focused stock indices, and real estate investment funds are some of the options that the bank is looking into. Their study should be done by October.
CNB Opinions Differ
The CNB’s leaders have different ideas about Bitcoin because they have been discussing it. Governor Ales Michl started the conversation by suggesting Bitcoin as a possible reserve asset. However, Vice Governor Eva Zamrazilova strongly disagreed, saying that Bitcoin does not meet the standards for a reliable reserve asset.
Conclusion
Even though digital currencies are becoming more popular, the Czech National Bank is still unsure if it wants to add Bitcoin to its funds. It’s not a good idea right now because of the unclear legal situation, the need for structural changes and the volatility.
