Research: Central Banks Worldwide Should Adopt Bitcoin as a Reserve Asset

News on October 27, according to Cointelegraph, the Bitcoin Policy Institute recently published a paper titled "The Case for Bitcoin as a Reserve Asset". The paper argues 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 imposed by the U.S. government.

The author of the paper, economist Matthew Ferranti believes that due to the weak correlation between decentralized assets and other financial instruments, bitcoin is an "effective portfolio diversification tool". Bitcoin lacks counterparty risk and can effectively hedge against sovereign default (including financial sanction risk), which Ferranti refers to as a "selective default", affecting countries like Venezuela and Russia.

Ferranti clarified that allocating bitcoin and gold may not be the answer for every central bank; however, emerging digital assets have value storage and hedging properties similar to gold - especially in cases of rapid currency depreciation.