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Because of its volatility, the Bank of Korea has decided not to include Bitcoin in its foreign exchange reserves. Officials acknowledged that they do not currently have any intentions to evaluate Bitcoin as a reserve asset in an answer to Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee.
The central bank emphasized in a Yonhap report on March 16 that Bitcoin is not appropriate for inclusion due to its price volatility. Officials also warned that during market downturns, “transaction costs to cash out Bitcoins could rise drastically,” adding further risk.
Foreign exchange reserves must meet stringent criteria specified by the International Monetary Fund (IMF), which include investment-grade credit ratings, market stability, and liquidity. The Bank of Korea reaffirmed its decision to avoid holding cryptocurrency reserves by stating that Bitcoin does not fit these requirements.
The debate about national cryptocurrency reserves has heated up on a global scale. Countries like Brazil and the Czech Republic have expressed interest in the idea, and the U.S. government recently declared a Strategic Bitcoin Reserve.
The Bank of Korea is nevertheless wary in spite of this trend, joining organizations such as the European Central Bank, Swiss National Bank, and the financial authorities of Japan, who have all voiced caution.
The central bank further clarified that it has not formally considered Bitcoin as part of its reserves and sees no immediate plans to do so.