A research paper titled “Hedging Sanctions Risk: Cryptocurrency in Central Bank Reserves,” was authored by Ph.D. candidate Matthew Ferranti from Harvard’s economics department, and likens central banks’ gold reserves to potential bitcoin holdings.
A research paper published at Harvard University is advocating that central banks should buy bitcoin BTCUSD, +0.34% as a hedge against sanctions by other countries.
Ferranti points out that central banks in countries across the globe should look into holding bitcoin as a hedge against possible financial sanctions. He gives the example of the unprecedented financial sanctions levied against Russia by the U.S. and many western nations following its invasion of Ukraine — billions in Russian assets were frozen after the Ukraine war began.
In the paper, Ferranti says El Salvador is a model for central banks owning bitcoin. The country, headed by bitcoin bull Nayib Bukele, has purchased millions of dollars worth of the crypto and has even made bitcoin an official national currency.Since the inception of popular cryptos like bitcoin and ether ETHUSD, +2.20%, part of its appeal has been the lack of involvement from central banks, in favor of the decentralized nature of the digital asset.
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