Bank of Korea’s Stance on Bitcoin Inclusion in Foreign Exchange Reserves
In a recent report by the Korea Economic Daily, South Korea’s central bank, the Bank of Korea (BOK), has expressed a cautious approach regarding the potential inclusion of bitcoin in its foreign exchange reserves. This statement came in response to inquiries from a member of the National Assembly’s Strategy and Finance Committee, emphasizing the BOK’s firm position against adopting bitcoin as part of its reserve strategy.
The central bank’s primary concern revolves around the notorious price volatility associated with bitcoin. With the cryptocurrency market known for its extreme fluctuations, the BOK is wary that these unpredictable price swings could lead to significantly increased transaction costs when converting bitcoin into cash. This scenario poses a notable risk to the stability of its reserves.
Furthermore, the BOK highlighted that bitcoin does not align with the International Monetary Fund’s (IMF) standards for foreign exchange reserve management. The IMF advocates for a prudent approach to managing liquidity, market, and credit risks—criteria that bitcoin’s erratic behavior fails to fulfill.
Despite this cautious stance, it is worth noting that South Korea boasts a vibrant and thriving cryptocurrency ecosystem. Local startups, tokens, exchanges, and firms collectively contribute billions of dollars in daily trading volumes within a relatively closed crypto market.
As of the latest trading data, bitcoin is priced at over $83,400 during the Asian afternoon session, reflecting a slight decline of 1% over the past 24 hours.
