Czech Central Bank Says Bitcoin Can Enhance Portfolio Returns, But Rejects Inclusion in Reserves
Aleš Michl, President of the Czech National Bank (CNB), stated that Bitcoin has a low long-term correlation with traditional assets, and a 1% allocation could enhance expected returns while keeping overall risk relatively unchanged.
Last October, the CNB established a $1 million test portfolio that included Bitcoin, but the bank's board decided in February not to include it in foreign exchange reserves, citing its volatility as significantly higher than other assets.
Michl warned that Bitcoin's price could either surge dramatically or drop to zero, viewing it as a high-risk asset, similar to venture capital but with higher liquidity.
Source: Public Information
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Aleš Michl has been advocating for discussions on Bitcoin reserves since early 2025, previously proposing a maximum 5% allocation which was approved by the board for further analysis. Subsequently, in November 2025, the CNB became the first central bank globally to purchase Bitcoin and other digital assets to establish a test portfolio. Michl, a former investment banker, has publicly promoted diversification beyond traditional gold and bonds.
In terms of capital strategy, the CNB placed the $1 million test outside of reserves in an innovation lab, motivated by the desire to gain practical blockchain experience rather than strategic holdings. Additionally, through public speeches and research reports, the CNB is testing policy boundaries within the EU framework, retaining data support for potential future adjustments while avoiding direct confrontation with ECB opposition.
Similar to the small alternative asset allocations of the Norwegian Sovereign Wealth Fund or Singapore's GIC, or the early crypto explorations by central banks in emerging markets like Hungary, the CNB is currently in the early stages of transitioning from observation to limited testing, focusing on verifying the low correlation diversification effect within its $180 billion reserves.
Essentially, this reflects regulatory changes: under global pressure for central bank reserve diversification, the CNB is exploring the role of Bitcoin through internal modeling and small-scale testing, balancing the potential high returns with the safety of sovereign funds, and using a 2-3 year evaluation period to buffer against political and market volatility, allowing decisions to remain independent of single-cycle sentiments.