The Czech National Bank (CNB) is planning to become the first European central bank to add cryptocurrency bitcoin to its reserves, the CNB governor Aleš Michl said in an interview with the Financial Times on January 29.

Michl said that Bitcoin could account for up to 5% of the overall CNB reserves of €140bn if the plan is implemented, noting that “Bitcoin seems good for the diversification of our assets.”

He also stated on X that, ultimately, the “bank board decides” and that “a thorough analysis is needed.” Michl is to seek an assessment from his CNB team on January 30.

Analysts surveyed by the Czech Press Agency (CTK) said Czechia could become the first EU country with parts of its reserves in cryptocurrency, but it would also run counter to the European monetary policy.

A country’s currency reserves are usually made up of conservative and stable assets whereas cryptocurrency have been seen as too volatile to be included in a reserve’s basket until now. Given the rising geopolitical tensions, many central banks have turned to the classic reserve medium of gold in the last few years, and the CNB has been buying it in “large quantities” in recent years, according to analysts at ING.

“Nowadays bitcoin may still be perceived as an exotic asset for central bank portfolios, but this may be seen very differently in ten years’ time. The Bundesbank Chief Joachim Nagel suggested steering clear of crypto, likening bitcoin to the seventeenth-century tulip bubble. Well, it seems Germany may once again be lagging behind technological advancements. The principle of credibility applies to any asset: its acceptance relies on collective belief,” ING said in a note.

Economist of the Trinity Bank Lukáš Kovanda stated that the move could lead to a more intensive conflict with the European Central Bank if Czechia were to adopt the euro currency.

Czechia committed to adopting the euro when it entered the EU in 2004 but has not adopted the euro as its legal tender. Since accession to the EU, several successive governments have done little to advance the bloc’s currency adoption. CNB has traditionally been cool on euro adoption, which would clip its monetary policy wings. Michl said earlier this month that adopting the euro “is no salvation.”

“If the bank board approves this step, it will mean a certain revolution in the European context,” CEO of Bit.plus Martin Stránský told CTK., adding that “it will strengthen investor confidence into the crypto” on which “bitcoin is based.”

Only Salvador and Bhutan have parts of their reserves in Bitcoin, Deloitte’s David Marek noted.

“At a time of growing institutional acceptance and political support, particularly from the side of Donald Trump, its [bitcoin’s] place in a well-diversified portfolio is confirmed,” Rostislav Plachy of the bitcoin section at Golden Gate.

The value of Bitcoin has soared since US President Donald Trump’s election in anticipation of multiple trade wars that may affect the value of the dollar. Michl also noted for the FT that Bitcoin will strengthen even without the support of Trump, who recently launched his own memecoin.

In an increasing fractured world in which the US has weaponised the dollar as part of the sanctions regime on Russia, many countries have been looking to cryptocurrencies as an alterative to the dollar to settle international trade deals.

Russia has been a leading proponent, after SWIFT sanctions that were imposed only days after Russia’s invasion of Ukraine in 2022 have effectively banned it from using the dollar, as part of the increasingly effective US financial sanctions. A the recent Kazan BRICS summit Russian President Vladimir Putin showcased a BRICS Pay cryptocurrency token that Russia is hoping to use to replace the dollar in trade deals with its partners. The Russian government rushed through a raft of legislation last year to underpin a digital ruble and is also toying with the idea of adding cryptocurrencies to its reserves.

Michl, a former advisor to populist billionaire politician Andrej Babiš, was appointed to the helm of CNB in the summer of 2022 by Babiš’s ally, the nationalist ex-President Miloš Zeman, who openly supported Trump and other strongman leaders including Vladimir Putin.