According to the Czech Republic's central bank governor, Alex Michl, incorporating bitcoin into the bank's reserves could enhance performance, but its high volatility poses a significant risk. Michl noted that while bitcoin has shown high returns over time, its risk profile is too great for investment. The Czech National Bank had purchased $1 million in bitcoin as part of a test portfolio, which also included a USD stablecoin and a tokenized deposit, to gain hands-on experience with blockchain-based assets.
A study by the bank found that bitcoin's low correlation with traditional assets could make it a valuable addition to a portfolio, potentially increasing returns without significantly increasing risk. However, the bank's Board ultimately decided against investing its foreign exchange reserves in bitcoin due to its volatility.