The Czech monetary authority intends to keep buying gold as stockpiling the precious metal is not significantly affecting the balance between risks and returns in its portfolio.
At the same time, the regulator is putting Bitcoin on the back burner for now. Despite recognizing its potential as a reserve asset, the central bank remains uneasy about its volatility.
Czech Republic’s state bank bets on gold
The Czech National Bank (CNB) has published an updated review of its foreign exchange reserve investments with a particular focus on gold and Bitcoin.
The paper is an extension of previous analysis on the matter and features new data, facilitating the assessment of its policies regarding these assets.
Both reached all-time highs in the past few months, with their markets experiencing significant volatility, especially for BTC, which eventually lost much of its value.
The document discusses the implications of potential changes to the composition of the bank’s forex reserves, which account for approximately 98% of its assets and are critical to its earnings.
It examines two main aspects – the ongoing accumulation of gold toward a 100-ton target set by the CNB and the “hypothetical inclusion of Bitcoin.”
The study is based on the state of its reserves as of September 30, 2025, and covers two timeframes, 2010-2025 and 2020-2025, using both reserve currencies and the Czech koruna.
In a press release published this week, the monetary authority noted it currently holds 67.2 metric tons of the precious metal and explained:
“On gold, we find that accumulating toward the 100-ton target represents a modest adjustment that leaves the portfolio’s risk-return profile broadly unchanged.”
This level of allocation provides a marginal boost to both expected returns and volatility, the central bank added, basing its estimate on historical data.
Regarding Bitcoin, the authors of the report pointed out that the crypto with the largest market cap “appears to be a powerful driver of portfolio returns” and can serve as a tool to increase expected return.
Besides, this can be achieved with a significantly smaller investment of funds compared to traditional risk assets, such as equities or gold, they acknowledged, detailing:
“A 1% allocation to Bitcoin could yield a more favorable risk-return profile than a 35% allocation to equities, with the additional benefit of lower overall portfolio volatility compared to the current composition.”
Bitcoin’s ‘critical caveat’ highlighted
The Czech National Bank’s analysts, however, have underscored what they call “a critical caveat for Bitcoin” and similar cryptocurrencies.
“Its defining characteristic is the temporal instability of its financial properties, including high volatility and shifting correlations,” they said, elaborating:
“Relying on past performance – particularly the high returns from its explosive initial growth – to forecast its future contribution to the reserve portfolio is significantly more problematic than with traditional assets.”
CNB to keep expanding its crypto expertise
Citing these shortcomings, the Czech monetary policy regulator recalled its Board’s decision not to invest foreign exchange reserves into Bitcoin yet.
Instead, the bank announced in November the establishment of a $1 million “test portfolio of digital assets,” which includes BTC, a USD-pegged stablecoin, and a tokenized dollar deposit.
The stated goal remains “to gain practical experience with blockchain-based assets and to learn how to store, manage, and process them safely,” the authority confirmed in its latest analysis.
While this portfolio is not part of the CNB’s official reserves, it will allow the bank to test operations such as crypto custody and settlement and to compare various types of assets.
“As digital assets become more common in global finance, this project should help the CNB build expertise,” concludes the paper, adding that the central bank will evaluate the results from the pilot in the next couple of years to determine its future course in that regard.
The Czech National Bank created the test portfolio after its head, Governor Aleš Michl, suggested investing up to 5% of its €140 billion reserves in Bitcoin early last year.
Meanwhile, cryptocurrency turnover in his country continued to grow, with trading volume surging by 50% to reach $750 million in 2025, as reported by Cryptopolitan.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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