Bank of Korea Rejects Bitcoin Reserve Idea Citing Volatility Risks
The Bank of Korea has dismissed the idea of establishing a strategic bitcoin reserve, despite growing global interest in cryptocurrencies' potential role in reserves. This is the first time the South Korean central bank has directly addressed the topic.
The decision comes despite U.S. President Donald Trump signing an executive order in March to create a strategic bitcoin price reserve, sparking discussions in South Korea and other Asian nations about following suit. The Bank of Korea cited bitcoin's extreme price volatility as a significant risk. As of March 17th, bitcoin price traded around $83,500, having fallen 23% from its January peak of $108,000.
The central bank also warned about high transaction costs to convert bitcoin to cash during market instability. Furthermore, it noted that bitcoin fails to meet the International Monetary Fund's criteria for reserve assets. The Bank of Korea stressed a 'cautious approach' towards bitcoin.
The Bank of Korea has rejected the idea of a strategic bitcoin reserve, highlighting concerns over price volatility, transaction costs, and bitcoin's failure to meet IMF criteria. This decision contrasts with recent developments in the U.S. and other nations exploring cryptocurrencies' potential in reserves.
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