Christine Lagarde, the President of the European Central Bank (ECB), has made it clear that Bitcoin will not be included in the reserves of any central bank in the European Union. She stated that central bank reserves must meet certain standards, and Bitcoin does not qualify.
Lagarde stated reserves need to be liquid, meaning they must be easy to buy and sell without losing value. They also have to be secure and safe from risks. In addition, she stressed that central bank reserves should not be linked to money laundering or any criminal activity, suggesting that Bitcoin’s reputation for being used in illegal transactions makes it unsuitable.
This statement reinforces the European Central Bank’s long-standing cautious stance on Bitcoin and other cryptocurrencies. While digital currencies have grown in popularity, many central banks, including the ECB, remain skeptical about their role in the global financial system.
Lagarde and other financial leaders have often raised concerns about Bitcoin’s price volatility, security risks, and connection to illicit activities.
A bank reserve is the amount of money that a bank keeps on hand, either in its vaults or deposited with a central bank, to meet withdrawal demands and regulatory requirements. These reserves ensure that banks have enough liquidity to operate safely and can cover customer withdrawals when needed.
For commercial banks, reserves help them manage daily transactions and protect against sudden financial shocks. For central banks, reserves are even more important. They include assets like foreign currencies, gold, and government bonds, which help stabilize the economy and back the value of a country’s currency.
Various organizations, regions, and nations worldwide are exploring ways to incorporate Bitcoin into their balance sheets, reserves, or even establish dedicated Bitcoin/Crypto Reserves. MicroStrategy and Tesla are among the publicly traded companies holding Bitcoin on their balance sheets.
On a national scale, El Salvador leads the way, having declared Bitcoin legal tender, though it is making adjustments to meet IMF requirements to mitigate volatility risks. Bhutan also holds Bitcoin. Within the EU, countries like the Czech Republic, Germany, and Poland are considering a Bitcoin Reserve. Meanwhile, in the Far East, Hong Kong is also looking to include Bitcoin in its reserves.
The U.S. government and several states are actively working on legislation to establish a Bitcoin Reserve. President Trump, newly elected, has signed an Executive Order to create a national digital assets stockpile, which includes Bitcoin. States such as Utah, Wyoming, Oklahoma, Texas, Kentucky, Illinois, Pennsylvania, Ohio, Alabama have either passed laws or proposed bills to support a Bitcoin Reserve.
The European Union has been working on regulations for digital assets, aiming to create a legal framework for cryptocurrencies. However, Lagarde’s statement suggests that even with regulation, Bitcoin will not be considered suitable for central bank reserves.
The ECB continues to focus on developing its own digital euro, which it said would offer a government-backed alternative to private cryptocurrencies.
Bitcoin supporters such as Michael Saylor argue that the cryptocurrency can serve as a hedge against inflation and financial instability, pointing to its growing adoption by private companies and individual investors. Some even believe that, over time, central banks may change their stance. However, Lagarde’s remarks indicate that, for now, the ECB is not open to the idea.
