According to the Czech Republic's central bank governor, Alex Michl, incorporating bitcoin into the bank's reserves could potentially enhance performance. However, he emphasized the asset's extreme volatility, stating that its value could skyrocket or plummet to zero. Michl noted that while all assets carry the risk of losing their value, bitcoin's unpredictability makes it unwise to invest solely in this asset. The central bank's study found that bitcoin has low correlation with traditional assets, which could lead to improved portfolio performance.
Nevertheless, the bank's board decided against investing its foreign exchange reserves in bitcoin due to its high risk. The Czech National Bank's experiment with a $1 million bitcoin portfolio, which also includes a USD stablecoin and a tokenized deposit, aimed to explore the potential of blockchain-based assets in the country's future payment and financial systems.