Brazil’s Central Bank Dismisses Bitcoin Reserve Idea Despite Legislative Push

Recently, Nilton David, Brazil's director of monetary policy at the central bank, dismissed the notion of adding cryptocurrencies to the country’s foreign reserve assets, calling it an inappropriate strategy.

This comes in contrast to the U.S.’s recent move to establish a Bitcoin reserve, a decision that hasn’t been followed by other major economies. Countries like Sweden and Japan have made it clear they aren’t rushing to adopt digital assets for reserves, signaling caution in the global financial community.

At the same time, Brazilian lawmaker Eros Biondini has pushed forward a bill aimed at creating a strategic Bitcoin reserve, which would allow the country to allocate as much as 5% of its international reserves into the leading cryptocurrency.

The proposal includes robust cybersecurity measures and AI-driven surveillance for the reserve. Advocates believe the initiative could not only help mitigate potential economic risks but also elevate Brazil’s standing in the global financial system, attracting foreign investment. However, it remains uncertain if the proposal will gain traction in the legislative process.

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On the flip side, Pedro Giocondo Guerra, a prominent official within the Lula administration, has publicly supported the creation of a Bitcoin reserve, calling the digital asset “digital gold.” Guerra argues that such a reserve could play a pivotal role in ensuring Brazil’s economic prosperity.

Yet, while some push for embracing Bitcoin, the National Monetary Council (CMN), Brazil’s top financial regulatory body, has taken a more cautious approach, recently prohibiting certain pension funds from investing in Bitcoin due to concerns over its inherent volatility and risks.

Alexander Stefanov