Christine Lagarde, president of the European Central Bank (ECB), stated that Bitcoin will not be part of the central banks’ reserves in the Eurozone.
The debate arises from the proposal of the Czech National Bank to diversify its reserves with new assets, excluding however the cryptocurrency. In this article, we see all the details.
The ECB reiterates the need for liquid and safe assets: problems for Bitcoin
The president of the European Central Bank, Christine Lagarde, stated firmly that Bitcoin will not become part of the reserves of European central banks.
His intervention comes after a conversation with the governor of the Czech National Bank, Aleš Michl, who suggested exploring new asset classes to diversify the country’s reserves.
Lagarde reiterated that central bank reserves must consist of liquid, safe, and secure assets, characteristics that, according to the ECB, Bitcoin does not meet:
“I am confident that BTC will not be included in the reserves of central banks under our advice,” she stated to the members of the press on January 30.
This stance highlights the clear division between traditional financial institutions and the cryptocurrency industry, which in recent years has seen a growing interest from some governments in holding Bitcoin as a strategic asset.
The debate on Bitcoin as a store of value was sparked by the decision of the Czech National Bank to explore new assets to diversify its portfolio.
However, the bank did not include Bitcoin among the options, probably to avoid risks related to its high volatility.
The suggestion by Governor Aleš Michl to expand the CNB’s portfolio was met with caution by the ECB. The European institution remains firm in its conservative approach, emphasizing the risks associated with criptovalute.
According to Lagarde, one of the main concerns is financial stability: Bitcoin is known for its volatility and lack of adequate regulation, elements that make it unsuitable as a reserve for a central bank.
Bitcoin in State Reserves: a Growing Trend?
Although Europe shows skepticism, the topic of Bitcoin reserves has become a global discussion point. After Donald Trump’s reelection in 2024, in the United States proposals have increased for the adoption of Bitcoin as a reserve asset.
Several American states, including Texas, Utah, Illinois, and Arizona, have introduced bills to create Bitcoin reserves, following the example of the Satoshi Action Fund, an advocacy group that promotes the adoption of cryptocurrencies in public institutions.
Even in the private sector, cryptocurrencies are gaining ground. The CEO of Coinbase, Brian Armstrong, recently suggested that nations adopt Bitcoin as a hedge against inflation.
A strategy already implemented by El Salvador, which continues to accumulate BTC as part of its national reserves.
Unlike the United States and other emerging countries, the European Union continues to resist the adoption of Bitcoin in its reserves.
The president of the BCE is not the only one expressing skepticism. Several European officials have indeed reiterated multiple times that cryptocurrencies cannot yet be considered safe financial instruments.
Christine Lagarde emphasized how the ECB’s attention is focused on more regulated alternatives, such as the possible development of a digital euro.
The central bank is indeed studying solutions based on blockchain that can offer the benefits of cryptocurrencies without the risks associated with their volatility.
In the meantime, the BCE maintains a cautious position, stating that any change in the reserve system will have to go through a thorough and rigorous analysis.
The impact on the bull market of cryptocurrencies
The statements by Lagarde do not seem to have had a negative impact on the price of Bitcoin, which is currently around 105,731 dollars, up by 3.8% in the last 24 hours.
This demonstrates how the cryptocurrency market continues to move independently of the statements from traditional financial institutions.
However, the position of the ECB could slow down the institutional adoption of Bitcoin in Europe. If the United States were to implement a strategic reserve of Bitcoin, the European Union might find itself in the position of having to reconsider its own strategy.