Taiwan sees Bitcoin as protection against inflation and US state bond engagement
Taiwan sees Bitcoin as protection against inflation and US state bond engagement
- The MP Ko Ju-Chun suggests adding Bitcoin to the national reserves.
- Taiwan has 423 metric tons of gold in his asset sports folio.
- New Hampshire in the USA has passed a law that includes Bitcoin in the state reserves.
Taiwan is considering a significant political change of course-one that could introduce Bitcoin into its national reserves.
In view of inflation pressure, global trade conflicts and increasing dependence on US state bonds, the country now questions whether its financial buffers are actually safe.
The legislator KO Ju-Chun recently suggested that he can add Bitcoin to the reserve mix of the central bank, whereby he leads its decentralized nature and defined care against future financial instability.
The proposal reflects a broader re-evaluation of traditional reserve systems, especially in view of the fact that over 90 % of Taiwans is currently investing $ 577 billion of foreign exchange reserves in US state bonds, which concerns with regard to diversification and liquidity throws.
increasing currency risks and dependence on US state bonds
Taiwan's export-oriented economy is particularly sensitive to geopolitical changes and inflation developments.
With growing tensions between the USA and China and the risk of disorders in the supply chain, the legislators are increasingly concerned about the vulnerability of the New Taiwan dollar (NTD).
currently Taiwan holds 423 metric tons of gold and almost all of his foreign exchange in US dollar-denominated assets.
analysts indicate that they were historically reliable, but their over concentration exposes the country to US money policy and possible sanctions in the event of a deterioration in relationships.
Bitcoin as protection, not as a replacement
The core of the proposal is not to turn Taiwan's current reserve strategy upside down, but to diversify it.
Kos Plan provides to reserve a small percentage of Taiwan's reserves for Bitcoin, which in his view offers an uncorrelated asset that is globally accessible and cannot be inflated arbitrarily.
The specified supply of Bitcoin with 21 million tokens, combined with its decentralized ledger system, is a crucial reason why it is considered.
According to Professor Liu Yiru from National Taiwan University, these properties make it particularly resistant to inflation-related dilution-in contrast to fiat currencies, which can be extended by central banks during economic shocks.
Former Premier Chen Cong also commented and found that Bitcoin could not work as a transaction currency on a large scale, but could help protect his role as a digital value memory.
Global dynamics for Bitcoin reserves
Taiwan's considerations come at a time when other governments with Bitcoin also experiment at the state level.
In the USA, New Hampshire recently passed the Bitcoin Reserve Act, which enables the inclusion of digital assets in the state reserves.
This step has initiated discussions in other states and emerging markets with high inflation or currency instability.
While Taiwan has not yet formalized such measures, the conversation signals a change in the perspective of political decision-makers on crypto-assets, not only as speculative investments, but as potential components of the national financial infrastructure.
In addition to the legislative interest, Ko suggests that a working group set up a working group to examine the feasibility, volatility and trust relisk in connection with Bitcoin reserves.
The central bank has so far not responded to the proposal publicly, although it is expected that it will be further discussed in the upcoming reviews of budget and monetary policy.
The broader context of these debates also requires Taiwan to balance its strong technology sector with the risks that arise from its geopolitical position.
The diversification of the reserve systems could not only serve economic goals, but also a broader strategic independence.