Seoul: The South Korean central bank has expressed a need for caution regarding the inclusion of bitcoin in its foreign exchange reserves due to its price volatility, officials mentioned on Sunday. Recent discussions among lawmakers have touched upon this possibility following U.S. President Donald Trump’s announcement about establishing a strategic bitcoin reserve and digital asset stockpile earlier this month.
According to Yonhap News Agency, in response to a question from Rep. Cha Gyu-geun of the minor Rebuilding Korea Party, the Bank of Korea (BOK) clarified that it “has neither discussed nor reviewed the possible inclusion of bitcoin in foreign exchange reserves” and emphasized the need for a cautious approach. The central bank pointed to the significant price volatility of bitcoin as a primary concern.
The BOK highlighted that during periods of cryptocurrency market instability, transaction costs for converting bitcoins to cash could escalate significantly. Furthermore, the central bank noted that cryptocurrencies do not satisfy the International Monetary Fund’s (IMF) criteria for foreign exchange reserves, which include factors such as liquidity, market value, and credit rating.