Bitcoin News Today: Brazil Central Bank Rejects Bitcoin Reserve Plan Over Volatility and Risk

The Central Bank of Brazil has officially rejected the implementation of a strategic bitcoin reserve, with Luís Guilherme Siciliano, head of the International Reserves Department, emphasizing the increased risks associated with holding the cryptocurrency as part of the nation’s foreign reserves. During a congressional hearing on Bill 4501/2024—proposing that up to 5% of Brazil’s reserves be allocated to bitcoin—Siciliano stated that the asset fails to meet the necessary criteria to be considered a reserve instrument. He further noted that the International Monetary Fund (IMF) classifies bitcoin as a non-financial asset, similar to land or mineral resources, reinforcing its position as a capital rather than a liquidity tool [1].

Siciliano highlighted that the adoption of bitcoin into the central bank’s portfolio would introduce volatility and uncertainty, which conflict with the stability and predictability required for reserve management. He also pointed out that only a small percentage of global central banks—approximately 3%—are considering similar initiatives, suggesting that the practice remains unconventional and unproven [1]. These concerns underscore a broader institutional hesitation to integrate cryptocurrencies into official financial systems, even as the global conversation around digital assets continues to expand.

In contrast to the central bank’s position, Pedro Guerra, Chief of Staff of the Ministry of Development, Industry, Commerce, and Services, expressed optimism about the potential benefits of adopting bitcoin. He described the move as a “revolution for public finances” and argued that Brazil could position itself as a leader in economic innovation by taking a pioneering role in the use of digital assets [1]. Despite this advocacy, the final decision will rest with lawmakers, who must now evaluate the arguments for and against the proposed bill after the public hearing.

The decision to dismiss the idea reflects a cautious approach to managing Brazil’s monetary reserves amid an evolving global financial landscape. While several countries are exploring the development of central bank digital currencies (CBDCs), Brazil’s central bank has chosen to focus on maintaining a stable and conventional reserve portfolio. This stance aligns with broader concerns about the regulatory and market uncertainties surrounding cryptocurrencies [1].

Although the central bank did not provide specific forecasts or numerical projections, its internal assessments indicate that the inclusion of bitcoin would pose greater risks to the reserve portfolio than benefits. The institution’s primary objective remains the preservation of financial stability, which currently takes precedence over the adoption of speculative or experimental instruments [1].

This outcome may influence similar discussions in other Latin American countries, where the role of digital currencies in public finance remains under debate. For now, Brazil’s central bank has no plans to revisit the idea of a bitcoin reserve, signaling a clear prioritization of risk mitigation over speculative innovation [1].

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[1] Central Bank of Brazil Dismisses Strategic Bitcoin Reserve Implementation – https://news.bitcoin.com/central-bank-of-brazil-dismisses-strategic-bitcoin-reserve-implementation/

[2] China Accelerates Digital Yuan Development to Challenge – https://www.fastbull.com/news-detail/china-accelerates-digital-yuan-development-to-challenge-dollar-4340939_0