PANews reported on October 27 that according to Cointelegraph, the Bitcoin Policy Institute recently published a paper titled "The Case for Bitcoin as a Reserve Asset", which argues that central banks should adopt Bitcoin as a reserve asset to hedge against rising inflation, geopolitical risks, capital control risks, sovereign defaults, bank failures, and international sanctions imposed by the US government.
Economist Matthew Ferranti, the paper’s author, argues that Bitcoin is an “effective portfolio diversification tool” due to the weak correlation between decentralized assets and other financial instruments. Bitcoin’s lack of counterparty risk allows it to effectively hedge against sovereign defaults (including financial sanctions risk), which Ferranti calls a “selective default” affecting countries such as Venezuela and Russia. Ferranti clarifies that a Bitcoin and gold allocation may not be the answer for every central bank; however, the emerging digital asset has the same store of value and hedging properties as gold — especially in the context of rapidly depreciating currencies.
