The Czech Republic's central bank governor, Alex Michl, has expressed that while bitcoin could potentially enhance the bank's reserves, its volatility poses a significant risk. In a speech, Michl noted that the asset's price fluctuations are substantially higher than those of other assets, making it a risky investment. Although all assets carry the risk of losing value, Michl emphasized the importance of diversification, stating that no single asset should be relied upon. The Czech National Bank had created a $1 million test portfolio including bitcoin to gain hands-on experience with blockchain-based assets, which could potentially redefine the country's payment and financial systems.
A study by the bank found that bitcoin has low correlation with traditional assets, making it a potentially valuable addition to a portfolio. However, due to its high risk, the bank's Board decided against investing its foreign exchange reserves in bitcoin at this time.