Central Bank Dismisses Immediate Plans for Bitcoin in Foreign Exchange Reserves
South Korea’s central bank has clarified that it has not reviewed or discussed adding Bitcoin to its foreign exchange reserves, citing concerns over volatility and liquidity.
On March 16, the Bank of Korea (BOK) responded to a written inquiry from Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee, stating that it is taking a “cautious approach” toward Bitcoin reserves. Officials emphasized that the bank has “neither discussed nor reviewed” the idea, citing the cryptocurrency’s unpredictable price swings.
Bitcoin’s Volatility Remains a Concern
The BOK pointed to Bitcoin’s extreme price fluctuations as a primary reason for its hesitation. Over the past month, Bitcoin has seen price swings between $98,000 and $76,000, before stabilizing around $83,000—a 15% drop since mid-February, according to CoinGecko.
“Bitcoin’s price volatility is very high,” the bank noted, adding that instability in the crypto market could lead to significantly higher transaction costs when converting Bitcoin to cash.
Calls for Bitcoin Reserves Amid Global Crypto Discussions
The discussion about Bitcoin reserves comes at a time when countries worldwide are exploring the role of digital assets in national financial strategies. Earlier this month, former U.S. President Donald Trump issued an executive order establishing a strategic Bitcoin reserve and digital asset stockpile, sparking debate among policymakers.
In South Korea, crypto industry advocates and members of the Democratic Party called for Bitcoin integration into national reserves and the development of a won-backed stablecoin at a seminar on March 6.
Bank of Korea Sticks to Traditional Reserve Criteria
Despite these discussions, the Bank of Korea maintains that foreign exchange reserves must meet strict liquidity and creditworthiness standards. According to the bank, reserves should be “immediately usable” when needed and have an investment-grade credit rating—criteria Bitcoin currently does not meet.
Professor Yang Jun-seok of the Catholic University of Korea echoed this sentiment, stating that foreign exchange reserves should reflect the currencies of key trading partners. Similarly, Professor Kang Tae-soo from the KAIST Graduate School of Finance suggested that the U.S. is more likely to rely on stablecoins rather than Bitcoin to maintain dollar dominance.
The global regulatory landscape continues to evolve, with South Korea’s financial watchdog recently reviewing Japan’s approach to crypto assets. The country is also considering lifting its ban on crypto exchange-traded funds (ETFs), signaling a broader shift in its stance toward digital assets.
