🇰🇷 The Bank of Korea Rejects Bitcoin Reserves, Volatility and Credit Rating Become Roadblocks
The Bank of Korea recently made it clear that it will not include Bitcoin in its foreign exchange reserves, citing excessive price volatility and non-compliance with the International Monetary Fund (IMF) standards for reserve assets. This stance makes the Bank of Korea one of the growing number of financial institutions worldwide that are cautious about cryptocurrencies.
In response to the question from National Assembly member Cha Gyu-geun, the central bank stated that it has not reviewed or discussed plans to include Bitcoin in national reserves and considers the idea unrealistic. Officials pointed out that Bitcoin lacks an investment-grade credit rating, has insufficient liquidity, experiences severe price fluctuations, and is easily affected by market speculation, making it unsuitable as a foreign exchange reserve.
However, South Korea's cautious attitude stands in stark contrast to the approaches of other countries. For example, former U.S. President Trump proposed establishing a "strategic Bitcoin reserve," while El Salvador even made Bitcoin legal tender. These countries value Bitcoin's potential as "digital gold," particularly in terms of its long-term value for hedging against traditional currency risks.
Despite the Bank of Korea's reserved stance on Bitcoin, domestic cryptocurrency supporters are still pushing for the development of digital assets. Some have proposed creating a stablecoin backed by the Korean won to enhance South Korea's competitiveness in the digital asset space. However, the central bank insists that foreign exchange reserves should primarily consist of liquid and stable credit assets, unless supported by the currencies of trade partners.
It is noteworthy that while the Bank of Korea is skeptical about Bitcoin as a reserve asset, they have not overlooked the development of the cryptocurrency space. In fact, South Korea has been actively formulating regulatory frameworks for cryptocurrency exchanges and digital asset trading, trying to find a balance in "seeking progress while maintaining stability."
In summary, the Bank of Korea's cautious attitude towards Bitcoin reflects its emphasis on financial stability. Although global interest in Bitcoin is growing, South Korea has chosen a more conservative path. However, with the rapid development of the cryptocurrency space, whether this attitude will change in the future remains a question worth watching.
What do you think of the Bank of Korea's decision? Do you believe the Bank of Korea will change its attitude in the future?
