The Banking Executive Magazine - February 2026 Issue 2

Should Central Banks Hold Bitcoin Reserves? The architecture of the international monetary system is once again under scrutiny. Heightened geopolitical tensions, expanding use of financial sanctions, and intensifying competi- tion among major powers have prompted central banks to reassess the composition of their foreign ex- change reserves. For decades, the US dollar has served as the principal an- chor of global liquidity and settle- ment. Today, however, diversification has become more than a portfolio preference; it is increasingly viewed as a strategic consideration. Against this backdrop, a new and controversial question has entered the policy debate: Should central banks hold Bitcoin as part of their re- serves? The discussion gained renewed mo- mentum following a 2025 executive order by US President Donald Trump establishing a strategic Bitcoin re- serve. The decision signaled a no- table shift in the posture of the United States toward digital assets. In parallel, Trump’s nominee for Federal Reserve chair, Kevin Warsh, publicly referred to Bitcoin as the “new gold,” reinforcing the notion that digital scarcity could, in time, rival the tra- ditional monetary role of precious metals. For policymakers across the Arab world, such developments merit close attention—not necessarily as endorsements, but as signals of how the global financial conversation is evolving. DIVERSIFICATION BEYOND THE DOLLAR The impetus for reserve diversifica- tion is not new. China and several large emerging markets have long ex- pressed concern over excessive re- liance on the US dollar. The increasing use of financial sanctions, coupled with periodic volatility in US monetary policy, has reinforced the desire among some sovereign ac- tors to reduce concentration risk. One visible consequence has been a substantial accumulation of gold. Over the past year, gold prices have risen by roughly 65%, driven in part by central bank demand. Gold’s en- during appeal lies in its independ- ence from any single sovereign issuer and its long-standing role as a store of value. Its monetary pedigree stretches back thousands of years, in- cluding to ancient Lydia, which first formalized coinage in precious met- als. In this environment, proponents of Bitcoin argue that it represents a log- ical extension of the diversification strategy. If central banks are already shifting marginal allocations from dollars into gold, why not also con- sider a digital asset that is algorithmi- cally scarce, politically neutral in design, and increasingly integrated into global financial infrastructure? The argument rests on three pillars: scarcity, neutrality, and resilience. ISSUE 206 FEBRUARY 2026 the BANKING EXECUTIVE 19