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Photo = Yonhap news |
[Alpha Biz= Paul Lee] The Bank of Korea has expressed a negative stance on including Bitcoin in the country's foreign exchange reserves, stating that it has not reviewed or considered the issue.
In a written response to Representative Cha Kyu-geun of the Justice Reform Party on Sunday, the Bank stated, “We need to approach the issue of Bitcoin’s inclusion in foreign exchange reserves with caution,” and added, “We have not discussed or reviewed this matter so far.” This marks the first time the Bank of Korea has publicly commented on Bitcoin reserves.
The central bank raised concerns about the high volatility of Bitcoin's price as a key issue. It warned that if the cryptocurrency market becomes unstable, the process of liquidating Bitcoin could significantly increase transaction costs. Bitcoin's price has recently fluctuated dramatically, soaring to nearly 160 million KRW earlier this year, before falling back to around 110 million KRW.
Additionally, the Bank of Korea pointed out that including Bitcoin would not align with the International Monetary Fund (IMF) standards for foreign exchange reserves. Foreign exchange reserves must be immediately accessible and liquid, according to the IMF’s guidelines, which specify that reserves should be held in currencies that are liquid, marketable, and tradable. Furthermore, the IMF mandates that reserves should be in investment-grade assets.
Most countries, other than the United States, have also expressed skepticism about the idea of adding Bitcoin to their foreign exchange reserves. The Bank of Korea mentioned that while some countries, such as the Czech Republic and Brazil, have shown a more positive outlook, major financial institutions like the European Central Bank (ECB), the Swiss National Bank, and the Bank of Japan have remained opposed to the concept.
AlphaBIZ Paul Lee(hoondork1977@alphabiz.co.kr)
