The Czech National Bank (CNB) is poised to decide on Thursday whether to allocate up to 5% of its €140 billion in foreign exchange reserves to Bitcoin, an amount totaling roughly €7 billion (roughly $7.31 billion). Governor Aleš Michl revealed the plan in an exclusive interview with the Financial Times, underlining a bold departure from the traditional asset strategies usually favored by major central banks.
CNB Eyes Bitcoin For 5% Of €140 Billion Reserves
Michl, who previously worked as an investment fund manager, expressed his conviction that introducing BTC into the CNB’s portfolio could serve as a viable way to diversify holdings. “For the diversification of our assets, Bitcoin seems good,” he told the FT. He acknowledged the cryptocurrency’s “extreme volatility” and limited track record but pointed to rising institutional interest since global asset managers like BlackRock launched Bitcoin exchange-traded funds last year.
Should the board approve the plan, the CNB could direct as much as 5% of its reserves—equivalent to approximately €7 billion—into Bitcoin. “Five percent [of our assets] is a lot of money, even for the Bitcoin market,” Michl noted, underscoring the potential impact of a sizable BTC purchase by a sovereign authority.
Most central banks around the world have steered clear of BTC, preferring “safer” instruments such as highly rated government bonds. A few have ventured into equities, but public disclosures of Bitcoin holdings by these institutions (except for El Salvador) remain virtually nonexistent.
Federal Reserve chair Jay Powell confirmed in December that the US central bank does not hold Bitcoin, while comparing it to gold, describing it as a virtual and digital speculative asset.
Other top monetary officials in Europe have been notoriously critical. The governor of the Bundesbank, Joachim Nagel, likened Bitcoin to “digital tulips,” referencing the 17th-century speculative bubble. European Central Bank (ECB) officials have similarly argued that the “fair value of Bitcoin is still zero.”
However, Michl struck a distinctly different tone. “I used to run an investment fund, so I’m a typical investment banker, I would say, I like profitability,” he told the FT. He also suggested more central banks might follow suit within the next five years, citing how some pension funds and commercial banks have begun holding BTC in their portfolios.
Michl acknowledges the gamble: “It’s possible to have a big range of outcomes, that Bitcoin will have a value of zero or an absolutely fantastic value.” Yet he also drew attention to the historical examples of failed corporate investments, such as Enron and Wirecard, arguing that underperformance is an inherent risk of portfolio management.
Internal CNB calculations suggest that if the central bank had held 5% of its foreign reserves in BTC over the past decade, its annual returns would have increased by 3.5%—albeit with double the volatility. “But I’m saying that my goal is to diversify the portfolio, so if Bitcoin is good [for that], then let’s have it,” Michl remarked.
In the interview, Michl referenced US President Donald Trump’s pro-crypto stance and the growing influence of Bitcoin-focused executives in Washington. Last week, Trump issued an executive order to explore the creation of a national digital asset stockpile, fueling further discussions about crypto at the highest levels of government.
While the Bitcoin proposal has captured headlines, the CNB already stands out for its relatively adventurous investment policy; 22% of its foreign exchange reserves are in equities—well above the norm for a central bank.
Michl intends to increase US stock holdings to 50% of that equity portfolio within three years, up from the current 30%. “We are buying gradually and in very small steps because the [US stock] prices are the highest in history,” he explained.
Whether the CNB board ultimately endorses Michl’s proposal to venture into BTC remains to be seen. If approved, the Czech National Bank could become the first major Western central bank to publicly hold crypto, setting a precedent that might inspire others—or serve as a cautionary tale.
The CNB’s board meeting is scheduled for Thursday, with a final vote on the governor’s Bitcoin proposal expected shortly thereafter.
At press time, BTC traded at $102,817.
