Reserves of gold and bitcoin are the best risk hedging option for central banks facing sanctions, says a Harvard scholar.
Matthew Ferranti, Ph.D. from the Harvard University School of Economics, has published a study entitled “Hedging Sanction Risk: Cryptocurrency in Central Bank Reserves,” which seeks 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 keep a certain amount of the first cryptocurrency in reserve 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 faced the risks of US sanctions, Ferranti writes, increased the share of their gold reserves much more often than those that faced less 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 encourage the diversification of central bank reserves and strengthen 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.
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