Economist argues Bitcoin's potential as central bank reserve

Economist Matthew Ferranti has proposed that Bitcoin (CRYPTO:BTC) could serve as a valuable reserve asset for central banks, drawing parallels to gold. 

In a paper published by the Bitcoin Policy Institute (BPI), Ferranti examined Bitcoin’s potential as a central bank reserve asset, emphasizing its crisis resilience and unique investment qualities. 

In his research, Ferranti explained, “I argue that Bitcoin is a reserve asset — analogous in some respects to gold — and some central banks might consider adding Bitcoin to their reserves.” 

He pointed out that while El Salvador remains the only country officially holding Bitcoin as a reserve, other nations may be exploring similar strategies amid increasing global financial instability and sanctions. 

Ferranti outlined several benefits of Bitcoin as a reserve asset, highlighting its limited supply, robust architecture, and liquidity. 

He noted that Bitcoin’s limited supply could serve as a buffer against inflation, while its decentralized nature and resilience to counterfeiting offer additional advantages over gold. 

The economist also emphasized that Bitcoin’s resistance to sanctions could be particularly beneficial for countries facing geopolitical pressures and financial restrictions. 

Despite advocating for Bitcoin’s potential, Ferranti advised caution. 

He stressed that “neither Bitcoin nor gold are necessarily suitable for every central bank, and it is beyond the scope of this paper to make specific investment recommendations.” 

Ferranti acknowledged the complexity of central bank reserve strategies, noting that each country’s economic and geopolitical situation must be carefully considered. 

Ferranti concluded that Bitcoin’s distinct qualities, such as its resilience to inflation, geopolitical tensions, capital controls, and sovereign debt crises, could make it a viable asset for central banks looking to diversify their reserves. 

He argued, “If gold is accepted as a reserve asset, Bitcoin merits similar consideration.”

At the time of reporting, the Bitcoin price was $67,610.59.