South Korea Central Bank (Bank of Korea) rejected Bitcoin’s suggestions to include the country’s foreign exchange reserves. The Bank said that such a step will not be appropriate due to Bitcoin’s high volatility.
Bitcoin will not enter foreign exchange reserves
According to South Korean -based media organization Yonhap, the Central Bank officials, Bitcoin’s foreign exchange reserves will not be added clearly. This statement was announced to the public after the response to the written question proposal of Cha Gyu-Geun, a member of the South Korean National Assembly Planning and Finance Committee.
Authorities said that Bitcoin has high price volatility and that the costs of converting cash during crisis may increase seriously. They also emphasized that Bitcoin cannot be accepted as a reserve asset on the grounds that the International Monetary Fund (IMF) did not comply with foreign exchange reserve criteria. In accordance with the IMF criteria, the assets used in foreign exchange reserves must be liquid, maintain stability in the market and have an investment credit rating.
Global Reserve Discussions and South Korea’s attitude
While the issue of national crypto reserves in the world is becoming more and more discussed, the South Korean Central Bank announced that it will continue its cautious approach. Following the US government’s decision to create a strategic Bitcoin reserve, some countries such as Brazil and Czechia said they were open to this idea. However, South Korean officials said that they did not take Bitcoin as a reserve by following a similar attitude to the European Central Bank, Swiss Central Bank and Japan’s financial authorities.
Central Bank officials, Bitcoin as a reserve asset use of any official examination or discussion, he added. However, some political groups within the country argue that Bitcoin’s potential role in South Korea’s financial system should be investigated.
South Korean stretches crypto arrangements
Despite the distance of South Korea Bank’s distance to Bitcoin, crypto arrangements throughout the country are gradually loosening. The Financial Audit Commission (FSC) plans to remove the restrictions on crypto trade for corporate investors and is working on a second regulatory framework for stablecoins.
In addition, the authorities have raised the issue of allowing exchange investment funds (ETF) based on crypto assets. The president of the Korean Exchange said that such funds can offer new opportunities to the national economy. These developments show that South Korea adopts a more balanced approach to the crypto market.
