The Bank of Korea (BOK) recently made it clear that they are not planning to hold bitcoin as part of their strategic reserve any time soon. Concerns about the digital currency’s price unpredictability and potential risks have led the central bank to dismiss the idea, even as global conversations continue about incorporating bitcoin into foreign exchange reserves—the United States is already making strides in this area.
In a detailed response to a query from the National Assembly’s Strategy and Finance Committee, BOK firmly rejected the notion of including bitcoin in its reserves. Officials highlighted bitcoin’s notorious price fluctuations as a primary concern. They warned that the costs associated with converting bitcoin into cash could skyrocket if the market becomes unstable.
To put things in perspective, as of March 17th, bitcoin was trading at roughly $83,500. This represents a significant drop of 23% from its January high of $108,000. Such volatility, according to the bank, poses a substantial threat to their reserves.
BOK also pointed out that bitcoin doesn’t meet the standards set by the International Monetary Fund (IMF) for reserve assets. The IMF requires reserves to be managed prudently in terms of liquidity, market risks, and credit risks, criteria which bitcoin currently fails to fulfill, according to the bank’s assessment.
This announcement is significant as it’s the first time the South Korean central bank has publicly tackled the subject of using bitcoin as a reserve asset, advocating instead for a “cautious approach” to the cryptocurrency.
Despite these reservations, the idea of a strategic bitcoin reserve continues to gain attention worldwide. Earlier this month, U.S. President Donald Trump took a bold step by signing an executive order to establish such a reserve. This has sparked conversations not only in South Korea but also in other Asian countries about possibly following the U.S.’s lead.
