Czech National Bank to Invest 5% of Reserves in Bitcoin — A Historic Move?

In a groundbreaking move, the Governor of the Czech National Bank (CNB), Ales Michl, is planning to allocate 5% of the country’s €140 billion ($146.13 billion) reserves into Bitcoin. If implemented, this would make the CNB the first major Western central bank to officially hold Bitcoin in its reserves.

With Bitcoin now ranking as the 7th-largest asset in the world, boasting a market cap of $2 trillion, this decision could reshape how national banks view cryptocurrency as a reserve asset.

Ales Michl believes that Bitcoin can help diversify the CNB’s reserves. Traditionally, central banks invest in U.S. government bonds, gold, and stable fiat currencies. However, Michl, known for his investment expertise, sees Bitcoin as a high-risk, high-reward asset that could boost long-term returns.

Despite Bitcoin’s volatility, the growing institutional adoption — especially with BlackRock’s Bitcoin ETFs and the cryptocurrency’s 144% surge in 2024 — has made it more attractive for long-term investors. If the CNB moves forward with this plan, it could pave the way for other central banks to follow suit.

With €140 billion in foreign reserves, a 5% Bitcoin allocation would be worth approximately €7 billion ($7.3 billion). Such an investment could significantly impact Bitcoin’s price and market sentiment.

Currently, the CNB already holds stocks as part of its reserves, and Bitcoin would be a major step toward embracing digital assets as part of national economic strategy.

Michl suggests that other central banks could start exploring Bitcoin reserves in the coming years. While many traditional financial institutions still view crypto as too volatile, growing adoption by hedge funds, pension funds, and major financial firms could change this perception.

If CNB’s move proves successful, it might inspire other European central banks to consider similar allocations. The question remains — is Bitcoin ready to become a global reserve asset?

Beyond Bitcoin, Michl strongly supports the Czech Republic’s independent monetary policy. He believes that maintaining control over interest rates and inflation measures is essential for financial stability. Bitcoin, in his view, could be an additional tool for strengthening national reserves while reducing reliance on fiat-only investments.

While this proposal is still in discussion, its approval could mark a turning point for Bitcoin’s role in global finance. If the Czech National Bank follows through, will other central banks soon join the Bitcoin revolution?