National Bank Chair’s Views on Adding Cryptocurrencies to Forex Reserves
The Chairman of the National Bank of Kyrgyzstan, Melis Turgunbaev, recently shared insights on why the bank is hesitant to include cryptocurrencies in its gold and foreign exchange reserves. In a post on Facebook, Turgunbaev outlined several key reasons for the caution.
While some central banks worldwide are exploring the idea of incorporating cryptocurrencies into their reserves, the National Bank of the Kyrgyz Republic is prioritizing security, liquidity, and profitability in managing its reserves. Turgunbaev emphasized that the bank aims to invest in reliable and low-risk assets to guarantee economic stability.
One major concern is the high volatility and unpredictable value fluctuations associated with cryptocurrencies, making them a risky choice for reserves. Additionally, the liquidity of cryptocurrencies is dependent on legislative and regulatory conditions, posing potential limitations and risks for the National Bank.
Furthermore, cryptocurrencies have not yet gained universal recognition as a reliable instrument for forming reserves. Turgunbaev highlighted that even central banks of economically developed countries are only exploring the potential of digital assets without actively including them in reserves.
Legal uncertainties and risks related to illicit activities associated with cryptocurrencies are also factors that the National Bank considers when evaluating their inclusion in reserves. Transparency and financial stability remain top priorities for the bank.
Despite the caution towards cryptocurrencies, the National Bank is actively researching modern financial technologies, including digital currencies. One notable initiative is the development of a digital currency called the “digital som,” tailored to the specific needs of the country’s economy while minimizing potential risks.
In conclusion, while the National Bank of Kyrgyzstan remains cautious about including cryptocurrencies in its reserves due to various risks and uncertainties, it continues to explore and adapt to the evolving landscape of financial technologies.
