According to the President of the European Central Bank (ECB) Christine Lagarde, the EU’s central bank reserves will not include Bitcoin (BTC). Bitcoin simply doesn’t meet the requirements of ‘liquid, secure, and safe’, she said.
This follows after the Czech National Bank (CNB) recommended for Bitcoin to be included in their reserves. According to a proposal made by the CNB, 5% of its public funds should be allocated to BTC, amounting to more than $7 billion. Although Bitcoin price is volatile, CNB Governor Aleš Michl sees it as a possible way to diversify reserves. But the bank has not yet decided and is continuing to consider other investment options.
In a conference on Jan 30, Lagarde said that the central bank reserves should not be related to risky assets such as Bitcoin. Crypto has been linked to money laundering and criminal activity, which is why she has voiced concern in that regard. However, some European countries, including Poland, Slovenia, Switzerland and the Czech Republic, and Germany have in fact proposed to add Bitcoin into their reserves.
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The United States has taken a different approach meanwhile. Former President Donald Trump banned CBDCs, but he has also spoken in support of a national reserve of Bitcoin. Texas, Utah, Illinois and Arizona are among US states that have proposed laws to create Bitcoin reserves.
Bitcoin’s price has been escalating and according to analysts it is anticipated to climb as high as between 100,000 $ and 150,000 $ by 2025. It can even reach $500,000 in the best case scenario. Governments and central banks have more reasons to watch carefully as investors watch them debate whether Bitcoin should be part of their financial systems.
The ECB is working on a Digital Euro to face the US dollar and stablecoins, but some European countries have not let go of Bitcoin. This is far from the end of the debate concerning whether Bitcoin belongs in central bank reserves.
Also read: Transak and Opera’s MiniPay Expand Stablecoin Access to Over 50 Countries
