According to the Czech Republic's central bank governor, Alex Michl, incorporating bitcoin into the bank's reserves could enhance performance due to its low correlation with traditional assets, but its high volatility poses a significant risk. Michl noted that while bitcoin has shown high returns over time, its unpredictability makes it unwise for investment.
The central bank's $1 million test portfolio, which includes bitcoin, a stablecoin, and a tokenized deposit, was established to gain experience with blockchain-based assets. A study by the CNB found that bitcoin's low long-term correlation with traditional assets could make it a valuable addition to a portfolio, potentially increasing returns without significantly raising risk.
However, the bank's board decided against investing its foreign exchange reserves in bitcoin due to its volatility, despite acknowledging its potential for higher returns compared to gold.