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Buy Bitcoin! suggests Harvard paper for central banks

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Bitcoin was created to get people to get rid of banks, and at the same time, bankers have, in general, contempt for cryptocurrencies, so the idea that central banks buy bitcoin seems absurd.

However, a new article from Harvard, one of the most important universities in the world, suggests that central banks buy Bitcoin as an alternative to gold.

The article was written by Matthew Ferranti, Harvard professor of economics, PhD candidate and adviser to Ken Rogoff, former economist for the IMF and the Board of Governors of the US Central Bank.

In his article titled “Hedge Sanctions Risk: Cryptocurrency in Central Bank Reserves”, Ferranti explores the possibility of Bitcoin serving as an alternative hedge asset.

“Banks, buy bitcoin”

In the event that a central bank cannot sufficiently protect itself from sanctions by means of physical gold, the best option, if according to him, it’s Bitcoin.

Ferranti claims that it makes sense for many central banks to hold a small amount of Bitcoin under normal circumstances, and many more Bitcoins if they face sanctions risks, although his analysis states that gold is a more useful hedge against sanctions.

“If a central bank cannot acquire enough physical gold to cover its sanctions risk , Bitcoin’s ideal share increases further, suggesting that gold and Bitcoin are imperfect substitutes. I conclude that sanctions risk could dampen the appeal of US Treasuries, drive broader diversification into central bank reserves, and bolster the long-term fundamental value of cryptocurrency and gold.” says the article.

According to their research, over the last 5 years, countries most at risk of US sanctions have seen an increase in their gold reserves, while countries with lower risk had a decrease in their reserves.

“It can take a long time to obtain gold, which a country under threat of sanctions may not have, and physical possession of it may be impossible.

This is where Bitcoin can come to the rescue .”