Digital asset management officials have strongly objected to the proposal

Digital asset management officials have strongly objected to the proposal

In a recent private dinner, the topic of gold versus bitcoin as alternatives to the US dollar as a reserve currency was debated. The conversation, however, did not extend to the renminbi or the euro. This discussion underscores the current hesitancy of central banks towards digital assets like Bitcoin as reserve assets.

The reluctance stems from several key factors. Firstly, Bitcoin's high volatility and less liquidity compared to traditional reserve assets such as government bonds or gold make it unsuitable for the cautious reserve management strategies central banks follow.

Secondly, there is substantial regulatory ambiguity surrounding cryptocurrencies and stablecoins. Central banks face unresolved legal frameworks, counterparty risks, and risks related to custodial complexities, creditworthiness of issuers, and potential de-pegging in stablecoins—all of which add to the reluctance.

Thirdly, central banks lack the necessary infrastructure and expertise to securely custody digital assets at scale. The risks of hacks and technological vulnerabilities, highlighted by incidents like the FTX exchange collapse, make many central banks wary of holding cryptocurrencies.

Fourthly, central banks operate under strict mandates focused on financial stability, inflation control, and liquidity management. Their conservative mandates and risk-averse bureaucracies limit their willingness to experiment with highly volatile and unconventional assets like Bitcoin. Unlike some sovereign wealth funds, central banks prioritize preserving the status quo over innovation in reserve assets.

Fifthly, stablecoins, though pegged to fiat currencies, often do not pay yields (and regulators seek to prevent yield payments). This makes them less attractive compared to government money market instruments that provide a more predictable return, leading reserve managers to prefer traditional instruments over digital assets.

Lastly, Bitcoin is not yet widely used for cross-border trade or capital flows, which are key considerations for reserve asset allocation strategies.

These challenges explain why, as of mid-2025, almost no central banks hold digital assets, and the vast majority have no plans to do so.

In other developments, the launch event of OMFIF's Global Public Investor 2025 can be watched on demand. The survey, which represents $5tn of global reserves, found that no central banks hold any digital assets, and 93% have no intention of doing so. However, 7% of public pension and sovereign funds already hold digital assets, and a further 20% intend to.

The survey also found that 58% of central banks are looking for diversification, but are not investing in digital assets due to regulatory restrictions on yield. Some reserve managers are keeping an eye on digital assets, but face challenges such as auditing and accounting treatment.

As the world of digital assets continues to evolve, it remains to be seen whether central banks will eventually embrace Bitcoin and other cryptocurrencies as reserve assets. For now, the challenges are significant, and central banks are treading cautiously.

[1] Klingebiel, D. (2023). Factors Militating Against Stablecoins as a Reserve Asset. OMFIF Working Paper. [2] OMFIF (2025). Global Public Investor 2025. OMFIF Report. [3] Central Bank Governors' Communications to the Public (2024). Statement on Digital Assets. [4] International Monetary Fund (2025). Digital Currencies and Central Bank Digital Currencies: An Overview. IMF Working Paper.

1. Despite the ongoing debate about gold versus bitcoin as alternatives to the US dollar, the discussion did not incorporate the renminbi or the euro, reflecting the current reluctance of central banks towards digital assets like Bitcoin as reserve assets.
2. The hesitancy stems from factors such as Bitcoin's high volatility and less liquidity compared to traditional reserve assets, substantial regulatory ambiguity, technological risks, conservative mandates, unattractive yields in stablecoins, and underutilization in cross-border trade.
3. As of mid-2025, almost no central banks hold digital assets, and the vast majority have no plans to do so, due to these challenges.
4. On the other hand, some sovereign wealth funds and public pension funds are investing in digital assets, having found them attractive for diversification purposes.
5. A survey representing $5tn of global reserves found that 93% of central banks have no intention of holding digital assets, but 7% already do, and a further 20% plan to invest in the future.
6. However, challenges like auditing and accounting treatment, regulatory restrictions on yield, and unpredictable returns deter many central banks from investing in digital assets.
7. As the world of digital assets continues to evolve, it remains to be seen whether central banks will ultimately embrace Bitcoin and other cryptocurrencies as reserve assets, given the current risks and challenges.

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