Harvard allows the possibility of using bitcoin by global central banks to circumvent sanctions

According to the author of the research, global banks should keep a small amount of BTC even without the threat of financial restrictions

23.11.2022 - 11:45

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2 min

What’s new? Central banks can use bitcoin as an alternative asset to protect themselves from sanctions, according to research by Matthew Ferranti, a Ph.D. candidate in economics, published at Harvard University. According to him, it is worthwhile for central banks to hold a small amount of cryptocurrency even under normal circumstances. However, when there is a risk of sanctions, according to Ferranti, global banks should keep some BTC along with their gold reserve.

Ferranti’s research paper

What else does the research say? Ferranti noted that countries facing the risk of restrictions from the United States increased the share of their gold reserves much more than nations with fewer sanctions risk. According to the researcher, if central banks of some countries cannot buy enough gold to hedge risks, then bitcoin reserves are the best alternative.

Moreover, Ferranti believes that sanctions risk may eventually spur the diversification of central bank reserves, reinforcing the value of cryptocurrencies and gold. The researcher concluded that diversity in countries’ reserves, including allocations to bitcoin and gold, will bring significant benefits.

In September, Russian State Duma deputy Vladimir Gutenev called for the use of cryptocurrencies to circumvent sanctions. Later, deputy Anatoly Aksakov reported that the law providing for the use of cryptocurrencies for cross-border payments may be adopted by the end of the year. He believes that the draft should be approved as soon as possible to give Russian businesses a tool to circumvent sanctions.

Back in May, the IMF confirmed the effectiveness of cryptocurrencies to circumvent sanctions due to their semi-legal status and a high degree of decentralization.

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