The Central Bank of South Korea Does Not Want Bitcoin in Its Reserves

The U.S. government may want to own and maintain stocks of digital assets, but not all countries think the same way. South Korea, for example, has expressed disinterest in including Bitcoin or any cryptocurrency in its foreign exchange reserves. A report from the local media outlet Korea Economic Daily revealed that the national central bank, The Bank of Korea, is not considering establishing a strategic reserve of Bitcoin or even including that asset in its foreign exchange reserves.

According to the report, the Bank of Korea revealed its stance in response to a written inquiry from Representative Cha Gyu-Geun, a member of the Democratic Party of Korea and the Planning and Finance Committee of the National Assembly. In a response dated March 16, the central bank stated that it has never considered including Bitcoin in its foreign exchange reserves. The bank also mentioned the need to approach the idea of accumulating Bitcoin cautiously for several reasons.

To begin with, the bank insisted that the high volatility of Bitcoin would be a challenge. The price of the asset constantly fluctuates. In recent weeks, its value has dropped from a high of $109,000 to as low as $76,700.

The Bank of Korea stated that it could face high transaction costs due to market instability when selling its Bitcoins and risks losses during future sales.

Furthermore, the South Korean central bank asserted that Bitcoin does not meet the International Monetary Fund (IMF) standards for inclusion in foreign exchange reserves. The financial institution cited standards that state reserves must be immediately available when needed, have a credit rating of at least the lowest investment grade, possess liquidity and marketability, and be expressible in convertible currency.

According to the Bank of Korea, Bitcoin does not meet these standards and therefore cannot be added to the institution’s foreign exchange reserves.

– It is known that some countries, such as the Czech Republic and Brazil, have expressed positive opinions, but the European Central Bank (ECB), the Swiss National Bank, and the Japanese government have expressed negative opinions – added the South Korean central bank.

The bank’s response followed numerous requests for a strategic reserve of Bitcoin from South Korean financial experts and members of the Democratic Party.