The central bank of South Korea is not buying into the (popular) notion of including Bitcoin in its foreign exchange stockpile, citing the cryptocurrency's extreme price volatility and lack of recogni

n Exclusion From Foreign Exchange Reserves

The central bank of South Korea has shot down the idea of including Bitcoin in its foreign exchange stockpile.

According to a report by The Korea Herald, the Bank of Korea (BOK) is among the global financial institutions that are yet to buy into the notion of adding crypto to its strategic holdings.

However, some lawmakers in South Korea have suggested that the country could consider diversifying its economic strategy with Bitcoin.

BTC Not Included In Foreign Exchange Reserves

The idea of integrating the flagship crypto in the country’s reserves was raised by Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee.

The BOK responded by stating that it had not reviewed or discussed such a move, and it saw little practicality in it.

"The IMF's standards for reserve assets, which include investment-grade credit rating, usability, and liquidity, are not met by Bitcoin," the central bank officials noted.

The bank considers Bitcoin unsuitable for foreign exchange holdings due to its price fluctuations and vulnerability to market speculation.

Global Interest In Bitcoin Reserves

Recent global developments are in stark contrast to the central bank’s cautious stance. It is worth noting that the United States has demonstrated a growing interest in Bitcoin, with US President Donald Trump recently advocating for a strategic Bitcoin reserve.

Other nations, such as El Salvador, have already included Bitcoin into their financial blueprint, depending on its long-term promise as a hedge against conventional currency risks.

Meanwhile, legislators and supporters of cryptocurrencies at the local scene argue that South Korea should look at using Bitcoin as a means of economic diversification.

Stablecoin Proposal

Some have even proposed the creation of a stablecoin backed by the national currency, the won, in order to keep South Korea’s competitive advantage in the fast-changing digital asset landscape.

Still, the BOK is adamant that other highly liquid and credit stable assets as well as significant trading partner currencies should make up most of the foreign exchange reserves.

South Korea has been actively in the process of devising regulatory frameworks for cryptocurrency exchanges and digital asset trading, despite its skepticism toward Bitcoin as a reserve asset.

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