The central banking authority of South Korea, the Bank of Korea (BOK), has adopted a careful position regarding the potential inclusion of bitcoin in its foreign currency reserves, as reported by a local media outlet.
During a recent inquiry from a member of the National Assembly’s Strategy and Finance Committee, the BOK clarified on Sunday that it has not considered the idea of incorporating BTC into its reserves.
The main concern for the BOK is bitcoin’s reputation for price volatility. The central bank is apprehensive that the significant fluctuations in the cryptocurrency market could lead to inflated transaction costs when converting bitcoin into cash, thereby posing a serious risk to its reserves.
Additionally, the BOK highlighted that bitcoin does not align with the foreign exchange reserve management standards set by the International Monetary Fund (IMF). The IMF stresses the need for careful management of liquidity, market, and credit risks—criteria that bitcoin does not fulfill due to its unpredictable nature.
South Korea boasts a vibrant cryptocurrency ecosystem, with local startups, digital tokens, exchanges, and companies generating billions of dollars in daily trading volumes within a relatively closed crypto market.
As of the afternoon hours in Asia, BTC is trading at over $83,400, reflecting a 1% drop over the last 24 hours.