Study: Central Banks May Use Bitcoin to Protect Against Sanctions

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Reserves from gold and bitcoins are the best option for hedging risks for central banks faced with sanctions, says a Harvard scientist.

Candidate of Sciences, Faculty of EconomicsHarvard University's Matthew Ferranti published a study, “Hedging Sanctions Risk: Cryptocurrency in Central Bank Reserves,” in which he tried to explore the potential of Bitcoin as an alternative hedging asset for central banks in the fight against sanctions.

The scientist argues that it is reasonable for banks to keepthere is a certain amount of the first cryptocurrency in stock under any political and market conditions. However, when there is a risk of sanctions against a country, they should stock up on large amounts of BTC and gold.

States facing riskssanctions from the United States, Ferranti writes, increased the share of their gold reserves much more often than states that had fewer such risks. At the same time, according to the scientist, if the central bank cannot purchase enough gold to hedge risks, it should think about buying bitcoins.

The risk of sanctions could ultimatelyencourage the diversification of central bank reserves and strengthen the value of cryptocurrencies and gold, the researcher believes - diversifying reserves and allocating portions of both bitcoins and gold has significant benefits.

Earlier, analysts at Web3 BDC reported that the leaders of cryptocurrency projects expect a decline in the price of Bitcoin, but do not plan to sell digital assets during the crypto winter.