Can Crypto-Assets Play a Role in Foreign Reserve Portfolios? : Not Today, and Likely Not in the Near Future (English)

Citing crypto-assets' growing market capitalization and footprint and evolving market structure, institutional investors, including central banks, have been exploring exposures to crypto-assets and reviewing whether including these instruments in their portfolios is reasonable. The authors discuss the potential role of crypto-assets in central bank reserve portfolios and argue that these instruments do not at present meet the eligibility criteria for inclusion. Crypto-assets are currently incompatible with the traditional objectives of safety, liquidity, and return; their value can be highly volatile, undermining their reliability as a store of value; and despite some guidance from policy makers and standard-setting bodies, they still face an uncertain regulatory environment. Crypto-assets typically operate on open, decentralized computer networks. Some decentralized networks aim to maintain an immutable distributed ledger that enables users to store funds with global reach and relatively fast settlement in a purely peer-to-peer fashion without the need for intermediaries or the potential for third-party interference. This paper is organized into two substantive sections, followed by a conclusion. The first main section assesses the suitability of crypto-assets for central bank reserve managers' purposes. The second substantive section analyzes the fundamental changes required if crypto-assets are to become eligible instruments for reserve portfolios. The conclusion summarizes the findings from analysis.