Czech National Bank on the verge of a revolution: Governor Michl plans investments in bitcoin

Czech National Bank on the verge of a revolution: Governor Michl plans investments in bitcoin

On 29 January 2025, Czech National Bank (CNB) Governor Ales Michl is set to unveil a revolutionary bitcoin investment plan. In an interview with the Financial Times, he said that if the board approves the proposal, bitcoin could make up as much as five per cent of the bank's total reserves, which currently stand at €140 billion (over CZK 3.5 trillion).

"Bitcoin appears to be a promising alternative for diversifying our assets," Michl said. He believes the value of bitcoin will continue to rise, even without the support of US President Donald Trump, suggesting its growing popularity among investors. The CNB could become the first Western central bank to invest publicly in cryptocurrencies.

Bitcoin recently reached a new all-time high when its price surpassed $109,000. This jump was boosted not only by Trump's re-election, but also by the approval of exchange-traded funds by US regulators, which led to a significant increase in bitcoin's value last year.

Michl also mentioned that the CNB plans to increase its gold reserves to 100 tonnes, while also considering investments in cryptocurrencies. "Currently, our bank has 22 percent of its portfolio in equities, and I would like to see half of that invested in US equities within three years," he added.

While Michl openly expresses his enthusiasm for bitcoin, his colleagues at European central banks, such as Joachim Nagel of Germany's Bundesbank, have warned of the risks associated with investing in cryptocurrencies. Nagel likened bitcoin to "digital tulips," a reference to the famous speculative bubble of the 17th century. The European Central Bank said last year that "the fair value of bitcoin is still zero" and that cryptocurrencies are not suitable as a means of payment or investment.

As the situation develops, the question remains whether the CNB will actually make a move towards cryptocurrency investment, and what the implications will be for the Czech economy and financial markets. But one thing is certain: under the leadership of Ales Michl, the CNB is embarking on a journey that could change the traditional notion of central banking.

*This is not an investment recommendation.

The Coingarage team