During a press conference yesterday, Christine Lagarde, President of the European Central Bank (ECB), rejected the idea of incorporating Bitcoin into European reserves on the basis that it is too volatile and associated with anti-money laundering. Her comments followed the Governor of the Czech National Bank saying the central bank would consider inclusion of Bitcoin with a weighting of up to 5% of its reserves.
Governor Aleš Michl acknowledged Bitcoin’s volatility when discussing the potential holdings with the Financial Times. “If you compare my position with other bankers, then I’m the one entering the jungle, or the pioneer,” Michl told the FT. “I used to run an investment fund, so I’m a typical investment banker I would say, I like profitability.”
Although Czechia does not use the euro, it is a member of the ECB General Council. Mrs Lagarde said she was “confident that bitcoin will not enter the reserves of any of the central banks of the General Council.” The Czech central bank voted yesterday, with a statement that didn’t mention cryptocurrency. However, it confirmed that it will analyze the addition of other asset classes to its reserves but will not take action until the analysis is complete. It added it will continue to disclose all its investments on a quarterly and annual basis, so any changes will be clear to see.
Meanwhile, the Trump administration has committed to exploring the potential for a “national digital asset stockpile”, but said it would likely come from asset seizures rather than buying Bitcoin. At least two states, Utah and Texas are considering including Bitcoin as part of state treasury holdings. A Utah house committee voted in favor this week (8 to 1), and Texas appears to have two Bills pending.
Mrs Lagarde’s comments:
“On this matter that you referred to and whether central bank reserves should or could include bitcoins, I think there is a view around the table of the Governing Council, and most likely the General Council as well, that reserves have to be liquid, that reserves have to be secure, that they have to be safe, that they should not be plagued by the suspicion of money laundering or other criminal activities.
And as a result, I am confident that bitcoin will not enter the reserves of any of the central banks of the General Council. I had a good conversation with my colleague from the Czech Republic, and I leave it to him to make whatever announcement he wants to make. But I am confident that he is convinced, as we all are, of the necessity to have liquid, secure and safe reserves.”
