South Korea’s Central Bank and Bitcoin Reserves
Key Points:
- South Korea’s central bank has not discussed or reviewed holding Bitcoin as a foreign exchange reserve, despite suggestions from some politicians and crypto advocates.
- The Bank of Korea emphasizes the need for a cautious approach due to Bitcoin’s high volatility.
- The bank’s response came after a query from a member of South Korea’s National Assembly.
Article Elaboration:
South Korea’s central bank, the Bank of Korea, recently addressed the topic of including Bitcoin in its foreign exchange reserves. While there have been suggestions from certain lawmakers and cryptocurrency lobbyists for the country to consider Bitcoin reserves, the central bank has clarified that it hasn’t engaged in any discussions or reviews regarding this idea.
The traditional role of foreign exchange reserves is to store stable and reliable assets that can support the country’s financial system in times of need. Given Bitcoin’s notorious price swings, this proposal is being approached with caution.
The Bank of Korea expressed the need to maintain a careful stance, acknowledging Bitcoin’s high volatility as a primary concern. Volatility means that Bitcoin’s value can change rapidly and unpredictably, which is a risk when using it to back national finances.
The central bank highlighted this as they responded to a query by Cha Gyu-geun.
