Bank of Korea Rejects Bitcoin for Foreign Exchange Reserves Citing Volatility

The Bank of Korea has made it clear that it is not considering the inclusion of Bitcoin in its foreign exchange reserves. This stance was communicated in response to a written inquiry from a member of the South Korean Congress, who is also part of the Planning and Finance Committee. The central bank's primary concern is the high volatility of Bitcoin's price, which could lead to significant transaction costs during the liquidation process if the virtual asset market becomes unstable. The Bank of Korea also noted that Bitcoin does not meet the International Monetary Fund's (IMF) standards for foreign exchange reserve calculations.

This is the first time the Bank of Korea has publicly addressed the issue of including Bitcoin in its foreign exchange reserves. The central bank emphasized that it has never discussed or considered this option due to the inherent risks associated with Bitcoin's volatility. The Bank of Korea's decision is in line with the cautious approach taken by other major central banks, such as the European Central Bank, the Swiss National Bank, and the Japanese government, which have also expressed opposition to including Bitcoin in their reserves.

The Bank of Korea's decision underscores its commitment to maintaining the stability and reliability of the nation's financial system. By adhering to international standards and prioritizing financial stability, the central bank ensures that its foreign exchange reserves remain robust and reliable. This cautious approach is essential for safeguarding the integrity of the financial system and protecting the interests of the nation's economy.