The Czech National Bank (CNB) is poised to choose on Thursday whether to allocate as much as 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 daring departure from the standard asset strategies normally favored by major central banks.

CNB Eyes Bitcoin For five% 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 function a viable strategy 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 yr.

Should the board approve the plan, the CNB could direct as much as 5% of its reserves—reminiscent of roughly €7 billion—into Bitcoin. “Five percent [of our assets] is loads of money, even for the Bitcoin market,” Michl noted, underscoring the potential impact of a large BTC purchase by a sovereign authority.

Most central banks around the globe have steered clear of BTC, preferring “safer” instruments equivalent to highly rated government bonds. A couple of have ventured into equities, but public disclosures of Bitcoin holdings by these institutions (apart from El Salvador) remain virtually nonexistent.

Federal Reserve chair Jay Powell confirmed in December that the US central bank doesn’t 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 Seventeenth-century speculative bubble. European Central Bank (ECB) officials have similarly argued that the “fair value of Bitcoin remains to be zero.”

Nevertheless, Michl struck a distinctly different tone. “I used to run an investment fund, so I’m a typical investment banker, I’d say, I like profitability,” he told the FT. He also suggested more central banks might follow suit inside the subsequent five years, citing how some pension funds and business banks have begun holding BTC of their portfolios.

Michl acknowledges the gamble: “It’s possible to have a wide range of outcomes, that Bitcoin could have a price of zero or a fully unbelievable value.” Yet he also drew attention to the historical examples of failed corporate investments, equivalent to 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 sweet [for that], then let’s have it,” Michl remarked.

Within 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 best levels of presidency.

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 extend US stock holdings to 50% of that equity portfolio inside three years, up from the present 30%. “We’re buying regularly and in very small steps since the [US stock] prices are the best in history,” he explained.

Whether the CNB board ultimately endorses Michl’s proposal to enterprise into BTC stays to be seen. If approved, the Czech National Bank could turn out to be the primary major Western central bank to publicly hold crypto, setting a precedent that may encourage others—or function 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.

Featured image created with DALL.E, chart from TradingView.com