South Korea Central Bank Excludes Bitcoin from Reserves

South Korea’s central bank has announced that Bitcoin will not be included in its foreign exchange reserves, emphasizing concerns over market volatility and liquidity.

The decision reflects ongoing global debates about cryptocurrency roles in national reserves, aligning with other central banks’ conservative approaches and underscoring digital assets’ challenges.

Bank of Korea Dismisses Bitcoin for Reserves

The Bank of Korea officially confirmed on October 16 that it “has never considered including Bitcoin in foreign exchange reserves,” stressing the need for a cautious approach. This statement follows inquiries by a National Assembly member seeking clarity.

The central bank cited high price volatility and liquidity issues as primary factors excluding Bitcoin. Including cryptocurrencies remains a debated topic globally, especially after similar discussions arose in the U.S. and other countries.

“While South Korea could consider utilizing Bitcoins already held for similar reasons, including them in the foreign exchange reserves is inappropriate at this time,” – Rep. Cha Kyu-geun, Member of the National Assembly’s Planning and Finance Committee

Bitcoin Price Volatility Fuels Reserve Debate

The latest Bitcoin data shows the cryptocurrency trading at $X which fluctuates amid debates over national reserve inclusion. Market reactions echo past trends, highlighting ongoing concerns over digital asset stability.

Experts highlight potential regulatory implications and challenges in financial stability should digital currencies gain reserve status. Prof. Yang Jun-seok indicated currencies linked to trading nations are preferable over cryptocurrencies lacking foundational stability.

Global Hesitancy Following ECB and Japan’s Example

Similar past events include decisions by major central banks like the European Central Bank and Japanese government avoiding cryptocurrency inclusion, citing instability and lack of alignment with traditional reserve assets.

Experts assert that without major national bond issuance in Bitcoin, the rationale for holding this digital asset is minimal. Historical economic trends support the exclusion, given cryptos do not match International Monetary Fund criteria.