December 5, 2022

Study: Central Banks May Use Bitcoin to Protect Against Sanctions

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1 min.

Study: Central Banks May Use Bitcoin to Protect Against Sanctions

Reserves of gold and bitcoin are the best risk hedging option for central banks facing sanctions, says a Harvard scholar.

PhD in Economics FacultyHarvard University Matthew Ferranti has published a study, “Hedging the Risk of Sanctions: 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 keepstock a certain amount of the first cryptocurrency under any political and market conditions. However, when there is a risk of imposing sanctions against the country, they should stock up on a lot of BTC and gold.

States that are at riskU.S. sanctions, 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 eventually stimulatediversifying central bank reserves and strengthening the value of cryptocurrencies and gold, the researcher believes that diversifying reserves and distributing parts in both bitcoin and gold has significant advantages.

Earlier, analysts at Web3 BDC reported that cryptocurrency project managers expect the price of bitcoin to drop, but do not plan to sell digital assets during the crypto winter.