Title page

Contents

Introduction 5

Central Bank Reserve Management and Crypto-Assets as an Investable Asset Class 9

Suitability of Investing in Crypto-Assets Given the Objectives and Principles of Reserve Management 9

Crypto-Assets versus Gold 15

The Fundamental Changes Required for Crypto-Assets to Become Suitable for Central Bank Reserve Portfolios 18

Improved Liquidity and Larger Market Cap 19

Reduced Price Volatility 19

Improved Availability of Investable Instruments 19

Adoption in Trade and Financial Flows 20

Robust Custody and Safekeeping Solutions 21

Clear Regulatory, Supervisory, and Oversight Treatment 21

Conclusion 23

Appendix: The Background of Crypto-Assets 25

Types of Crypto-Assets and Their Main Characteristics 25

Options for Investors to Obtain Exposure to Crypto-Assets 29

References 31

Figure 1. Market Capitalization of the Top Five Crypto-Assets 6

Figure 2. Share of Respondents Indicating They Either Owned or Used Crypto-Assets 7

Figure 3. Adoption of Crypto-Assets by Type of Investor 7

Figure 4. Reserve Management Objectives 10

Figure 5. Daily Trading Volume of Major Crypto-Assets and Currencies in Special Drawing Rights Basket 10

Figure 6. Market Capitalization of Major Crypto-Assets and Traditional Reserve Asset Classes 11

Figure 7. Reserve Management Principles (2021) 12

Figure 8. Volatility of Bitcoin, Fixed Income, and Equities 12

Figure 9. Equity Returns and Volatility 13

Figure 10. Bitcoin's Correlation with Equities 14

Figure 11. Factors Shaping Currency Composition 15

Figure 12. Share of Gold in Foreign Exchange Reserves (% of total) 16

Figure 13. Mapping Reserve Management Dimensions to Crypto-Assets 18

Figure 14. Summary: Mapping Reserve Management Dimensions to Required Changes for Crypto-Assets 24

Boxes

BOX 1. FUNDAMENTAL DIFFERENCES BETWEEN CRYPTO-ASSETS AND CENTRAL BANK DIGITAL CURRENCIES 8

Table A.1./Figure 14. Summary: Mapping Reserve Management Dimensions to Required Changes for Crypto-Assets 25

Table A.2. Main Characteristics of Crypto-Assets 28

Table A.3. Institutions' Publicly Disclosed Bitcoin Holdings 29

Figure A.1/Figure 12. Share of Gold in Foreign Exchange Reserves (% of total) 27