In our latest report, BPI Economics Fellow Matthew Ferranti explores why Central Banks might consider allocating to bitcoin. Download the report here.
Central banks worldwide have been increasing their gold reserves, seeking stability amid economic uncertainties. Our latest report examines the extent to which the motivations behind central bank gold holdings similarly justify Bitcoin allocations.
Authored by BPI Economics Fellow Matthew Ferranti, the report argues that Bitcoin presents a unique opportunity for central banks. According to Dr. Ferranti:
“Bitcoin possesses some unique investment characteristics that could help central banks diversify against several risks, including those related to inflation, geopolitical tensions, capital controls, sovereign default, bank failures, and financial sanctions. To the extent that gold is a reserve asset, so is Bitcoin."
The report analyzes Bitcoin’s historical context, performance during economic and geopolitical crises, correlation with traditional assets, potential as an inflation hedge, liquidity, and lack of default risk, explaining how some central banks may justify modest allocations to Bitcoin.
The full report is available for download here.
*Disclaimer: A previous version of this paper incorrectly reported the size and value of El Salvador's bitcoin holdings. As of October 28, 2024, the country holds 5,917 bitcoin worth approximately $407 million.
