January 12, 2024

European Central Bank Unlikely to Invest in Bitcoin, Says Executive Board Member

While numerous central banks hold gold reserves, the European Central Bank (ECB) has signaled that it has no plans to embrace "digital gold" in the form of bitcoin.

The introduction of a bitcoin exchange-traded fund (ETF) open doors for traditional investors to engage with the leading cryptocurrency. However, one notable entity has ruled out any involvement โ€“ the European Central Bank (ECB).

In response to inquiries about the possibility of the ECB adding bitcoin to its balance sheet, ECB executive board member Isabel Schnabel made it clear in a recent morning Q&A on X that the central bank is "very unlikely to ever buy bitcoin".

Responsible for overseeing monetary conditions in Eurozone countries, the European Central Bank is comparable to the Jerome Powell-led Federal Reserve in the United States.

Nominated by the German government in 2019, Schnabel serves on the ECB's executive board, a six-person committee tasked with implementing monetary policy based on guidance from the ECB's governing council.

Known for her previous hawkish stance on interest rate hikes amid Europe's battle with inflation, Schnabel has recently shifted her position on the matter.

Schnabel is the latest in a series of ECB board members who have publicly expressed views on cryptocurrencies. Elizabeth McCaul and Fabio Panetta advocated for more stringent regulations on cryptocurrencies and exchanges in the previous year.

While the ECB, like other central banks, is exploring the development of a central bank digital currency (CBDC), a digital representation of fiat currency, it remains in the "preparation phase" for its digital euro. Crypto enthusiasts often criticize CBDCs, which are regulated by central banks and may operate on permissioned blockchains.

Several European central banks maintain significant gold reserves on their balance sheets, with some increasing their holdings in recent years. However, the adoption of bitcoin, often likened to a digital equivalent of gold, has been slow among central banks.

Despite the launch of a bitcoin ETF, it appears unlikely that this stance will change, at least in the immediate future. Schnabel's statement has drawn criticism from online Bitcoin enthusiasts, who speculate about the possibility of a shift in sentiment over time.

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