Study: Central banks should adopt Bitcoin as a reserve asset

On October 27th, according to Cointelegraph, the Bitcoin Policy Research Institute recently published a paper titled "The Case for Bitcoin as a Reserve Asset". The paper suggests that central banks around the world should adopt Bitcoin as a reserve asset to hedge against rising inflation, geopolitical risks, capital control risks, sovereign defaults, bank failures, and international sanctions implemented by the US government.

The author of the paper, economist Matthew Ferranti, believes that Bitcoin is an "effective investment portfolio diversification tool" because of its weak correlation with other financial instruments. Bitcoin lacks counterparty risk and can effectively hedge against sovereign defaults (including financial sanction risks), which Ferranti refers to as "selective defaults," affecting countries such as Venezuela and Russia. Ferranti clarifies that Bitcoin and gold allocation may not be the answer for every central bank; however, emerging digital assets have the same value storage and hedging properties as gold - especially in the case of rapid currency depreciation.