South Korea’s central bank hasn’t reviewed a Bitcoin reserve despite calls from lawmakers and lobbyists.
The Bank of Korea has stated that it is moving forward with a “cautious approach” about the possibility of incorporating Bitcoin as a foreign exchange reserve.
After receiving a written question on March 16, officials from the Korean central bank responded by stating that they had not investigated the possibility of a Bitcoin reserve, noting the significant volatility of the cryptocurrency.
It was reported by the Korea Herald that central bankers responded to a question posed by Representative Cha Gyu-geun of the Planning and Finance Committee of the National Assembly by stating that they have “neither discussed nor reviewed the possible inclusion of Bitcoin in foreign exchange reserves.”
They also stated that “a cautious approach is needed.”The central bank observed that “the price volatility of Bitcoin is very high” and then went on to say that “in the case of cryptocurrency market instability, transaction costs to cash out Bitcoins could rise drastically.”
According to CoinGecko, the price of Bitcoin has experienced a range of fluctuations over the past thirty days, ranging from $98,000 to $76,000, before finally settling at its current level of approximately $83,000. This is a 15% fall since February 16th.
Trump Establishes Bitcoin Reserve
Earlier this month, President Donald Trump issued an executive order that established a strategic Bitcoin reserve and digital asset stockpile. This move comes at a time when there are growing talks taking place all over the world about the role that crypto assets play in national financial strategy.
Cryptocurrency industry lobbyists and some members of the Democratic Party of Korea encouraged the country to incorporate Bitcoin into its national reserves and build a won-backed stablecoin during a seminar that took place on March 6.
The Bank of Korea, on the other hand, highlighted that its foreign exchange reserves must have liquidity and be readily usable when they are required, in addition to having a credit rating of investment grade or above.
Bitcoin, in the Bank of Korea’s perspective, does not match these criteria.Professor Yang Jun-seok of the Catholic University of Korea expressed agreement with the statement that “it is appropriate for foreign exchange to be held in proportion to the currencies of countries with which we trade.”
Kang Tae-soo, a professor at the KAIST Graduate School of Finance, made a comment on the United States’ potential use of stablecoins rather than Bitcoin to preserve its dominance in the global currency market. He went on to say that it is necessary to determine whether or not the International Monetary Fund will acknowledge stablecoins as foreign exchange reserves in the future.
While considering whether or not to lift a restriction on cryptocurrency exchange-traded funds in South Korea, the country’s financial regulator conducted an investigation into the way in which the Japanese Financial Services Agency has been regulating cryptocurrency assets.
