Yesterday, the central bank of the Czech Republic decided to accept the request of its President, and to assess the feasibility and opportunity of activating a reserve in Bitcoin.
The official press release of the bank states that the Board of Directors of the Czech National Bank (CNB) has approved a proposal to analyze the investment possibilities in additional asset classes, on the proposal of the governor Aleš Michl.
The reserves in Bitcoin: the idea of the central bank of the Czech Republic
Michl, in fact, had previously given an interview to the Financial Times in which he suggested that the Czech central bank might consider holding billions of dollars in its reserves in the form of Bitcoin.
The governor had nevertheless specified from the beginning that it was only an idea still under analysis, adding that no immediate decision is expected regarding it.
Yesterday’s decision by CNB goes precisely in this direction, as it merely accepts the proposal to assess the feasibility and opportunity of such an initiative, without for now either approving or rejecting it.
In the event that this initiative goes through, it would be the first Western banca centrale ever to hold reserves in BTC.
In fact, central banks usually hold reserves in conservative assets and stay away from riskier ones. Furthermore, many central banks have long been warning citizens about the risks involved in investing or speculating on risk-on financial assets.
In fact, to tell the truth, as of today it appears that no major central bank in the world owns Bitcoin, although there are several public entities, even important ones, that hold them.
ECB and the other central banks
It is not a coincidence that after Michl’s interview with the Financial Times, the governor of the European Central Bank (ECB), Christine Lagarde, explicitly said that she does not expect any central bank in the Eurozone to have Bitcoin in their reserves in the short term.
NOW – ECB chief Lagarde says she "is confident" that Bitcoin will not end up in the EU central bank reserves. pic.twitter.com/ZWXPtmZTm0
— Disclose.tv (@disclosetv) January 30, 2025
Lagarde in her speech explicitly mentions her colleagues from the CNB, also because the Czech Republic is part of the EU. However, the Central European country is not part of the Eurozone, so much so that its central bank is not among those that have subscribed to the capital shares of the BCE.
However, one of the members of the General Council of the ECB is the Czech Jiří Rusnok, with whom Lagarde states she has discussed the topic of reserves in Bitcoin.
In fact, the Czech Republic has already embarked on a path to adopt the Euro instead of its Crown, but it has not yet completed its entry into the Eurozone. At this moment, its adhesion to the Eurozone is practically suspended.
The story of Aleš Michl
Michl took over the leadership of the Czech central bank in 2022.
He is a Czech economist, former investment strategist of a commercial bank, as well as co-founder of an algorithmic asset management fund.
When he took office, inflation in the country had risen to 17.5%, subsequently reaching a peak of 18% a few months later. Now the Czech central bank has managed to bring it back to 3%, in line for example with that of the USA and not much higher than that of the Eurozone.
Furthermore, under his leadership, the CNB began to purchase gold and increase the share of stocks in its foreign exchange reserves, to improve the expected return on the bank’s assets.
He can be defined at the same time as a competent and effective official, but also an innovator, and all this facilitates the understanding of the reasons why he proposed to evaluate the inclusion of Bitcoin in the bank’s reserves.
The potential Bitcoin reserve of the Czech National Bank (CNB)
The idea of Michl would be to authorize the Czech central bank to hold up to 5% of its reserves in BTC.
The CNB currently has 140 miliardi di euro in reserves (146 billion dollars), so the maximum ceiling set by Michl for now would be just over seven billion dollars.
Note that it would be a figure higher than the current market value of BTC held, for example, by the ETF of Ark (ARKB), and not much lower than those of Bitcoin held by Tether.
It should be noted, however, that this is a maximum cap, and not the amount that the bank might want to invest in BTC. Furthermore, the decision on the possible investment has not yet been made, and it seems that it will take a long time before the bank expresses itself definitively on the matter.
Michl also stated on X that Bitcoin has significant volatility, and that this makes it more difficult to take advantage of its current low correlation with other assets.
The words of the governor of the CNB are decidedly cautious, but at least they seem open to possibilities.
In fact, to the Financial Times he had also stated that an investment by the central bank in Bitcoin could prove to be useless or it could have an “absolutely fantastic value.” He also added that he believes Bitcoin will continue to grow even without the possible support of the US president, as it represents an alternative investment for many people.
The comment
One of the main crypto companies in the world, Trezor, was founded and is still based in the Czech Republic.
The Bitcoin Analyst at Trezor, Lucien Bourdon, shared an exclusive comment with The Cryptonomist regarding Michl’s idea:
“The Czech Republic has long been at the forefront of Bitcoin innovation — home to the first mining pool, the first hardware wallet, and one of Europe’s largest Bitcoin conferences. Now, the country is positioned to take a historic step. The Czech National Bank (CNB) will discuss allocating up to 5% of its €140 billion reserves into Bitcoin. If approved, this decision could mark a turning point — not just for the Czech Republic, but for the global adoption of Bitcoin as a tool for national economic strategy.
Bitcoin empowers individuals by granting them control over their wealth without reliance on third parties. But states, too, can harness Bitcoin’s properties to strengthen their own sovereignty. If a nation successfully integrates Bitcoin into its reserves — self-custodied and outside of foreign regulatory control —it gains a hedge against monetary debasement and external economic pressure.
On paper, the debate over Bitcoin reserves seems like a financial discussion, but in reality, it’s just as much a political and philosophical one. Governments and central banks are being forced to reckon with a monetary system they don’t control, and some aren’t ready for that shift. But the writing is on the wall. As inflation erodes fiat’s purchasing power and Bitcoin continues to grow, the question isn’t whether central banks should hold Bitcoin — but whether they can afford not tO”.
After the President of the ECB, Christine Lagarde, rejected the proposal from the Czech bank, Bourdon continued by saying:
“If money laundering and financial crime are the standard for excluding an asset from central bank reserves, shouldn’t the euro itself be scrutinized given the track record of traditional banks?
Bitcoin transactions are transparent. Traditional banking scandals happen behind closed doors. Which system is really more accountable?
Lagarde says Bitcoin is unsuitable for reserves because it must be ‘liquid, secure, and safe.’ Yet Bitcoin is one of the most liquid assets in the world, trading 24/7 without requiring a counterparty. The euro, on the other hand, is a complex system of pegged currencies that has required constant intervention to hold itself together. What, exactly, is unstable here?
The ECB claims Bitcoin is too unstable for reserves, yet central banks have devalued their own currencies through endless stimulus, bailouts, and rate manipulation. The real issue isn’t stability — it’s control. Bitcoin represents a monetary system they can’t print, and that’s why they fear it“.