According to a report by Cointelegraph on October 27, PANews states that 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 U.S. government.
The author of the paper, economist Matthew Ferranti, believes that due to the weak correlation between decentralized assets and other financial instruments, Bitcoin is an 'effective portfolio diversification tool.' Bitcoin lacks counterparty risk and can effectively hedge against sovereign defaults (including the risk of financial sanctions), which Ferranti refers to as a 'selective default' affecting countries like Venezuela and Russia. Ferranti clarifies that a Bitcoin and gold allocation may not be the answer for every central bank; however, emerging digital assets have the same value storage and hedging properties as gold—especially in cases of rapid currency depreciation.
