In recent statements, ECB President Christine Lagarde has made it clear that no central bank in the EU will be adding bitcoin to its reserves.
This comes as the debate about bitcoin in national reserves is heating up, especially after the Czech National Bank (CNB) proposed to include bitcoin in its diversification strategy.
In a press conference in Frankfurt, Lagarde said central bank reserves must be “liquid, secure and safe”. She argued that bitcoin’s volatility and association with criminal activities make it not fit for this purpose.
“I am confident that Bitcoin will not enter the reserves of any of the central banks of the General Council,” she said. “[Bitcoin is] plagued by the suspicion of money laundering or other criminal activities.”
This announcement during the ECB’s recent rate setting meeting is in line with the broader skepticism in the European Union about Bitcoin’s role in the traditional financial system.
“Reserves have to be liquid, that reserves have to be secure, that they have to be safe,” she repeated at the press conference. She also said that the ECB is looking at more regulated alternatives, like a digital euro which could offer some of the benefits of “cryptocurrencies” without the risks.
Related: German Lawmaker Joana Cotar Slams CBDC, Seeks Bitcoin Legal Tender
The debate about Bitcoin reserves started after Aleš Michl, the Governor of the Czech National Bank, proposed to include bitcoin in the bank’s reserves. Michl, who has a background in investment banking, considers this a “pioneer” move.
“If you compare my position with other bankers, then I’m the one entering the jungle, or the pioneer,” Michl told the Financial Times. “I want to diversify the portfolio and if Bitcoin is good then let’s have it.”
But Michl’s proposal was rejected by the Czech Finance Minister Zbynek Stanjura and the ECB. Stanjura said the central bank should be a symbol of stability and bitcoin’s volatility makes it not an asset. “If you look at Bitcoin trading, it’s definitely not a stable asset,” he said.
Despite the opposition, the CNB approved a proposal to study the inclusion of “additional asset classes” in their reserves. Bitcoin was not mentioned in the official statement, but Michl had said earlier that it would be part of the discussion.
Lagarde’s comments show a growing divide between Europe and the United States when it comes to Bitcoin adoption. While European politicians are still hesitant, several U.S. states and institutions are getting into Bitcoin as a reserve asset.
In the U.S., Texas, Utah and Illinois are some of the states looking at legislation to create a bitcoin reserve. Last year Senator Cynthia Lummis proposed adding bitcoin to the U.S. balance sheet, calling it a way to “supercharge the U.S. dollar’s position as the world reserve currency for decades to come.”
Meanwhile, the Trump administration has looked at a “national digital asset stockpile” but it would likely come from asset seizures rather than buying bitcoin directly.
Federal Reserve Chair Jerome Powell has also been more open, saying commercial banks can provide Bitcoin services as long as they manage the risks.
In Europe, Poland and Romania have also ruled out investing in Bitcoin, with Poland’s central bank calling it “an asset class with very high risk.”
