Expert says Bitcoin could hedge central banks against sanctions

Central banks could use Bitcoin to shield themselves from economic restrictions imposed by reserve-currency issuers. In his исследовании, Harvard University PhD candidate Matthew Ferranti arrived at this conclusion.

According to his calculations, in recent years, countries with a higher risk of U.S. sanctions have increased the share of gold in their reserves relative to states with a lower probability of being restricted.

In his theoretical model, Ferranti noted Bitcoin’s potential as an alternative hedge if central banks cannot acquire enough precious metal.

“Cryptocurrencies offer some protection from sanctions but introduce the risk of high volatility,” he added.

At the same time, Ferranti suggested that even without the threat of economic measures, it is reasonable for banks to hold Bitcoin alongside gold. In the researcher’s view, the risk of sanctions could ultimately spur central bank reserve diversification.

Earlier, Moody’s analysts stated that cryptocurrencies are not an effective solution for Russia to evade sanctions imposed after its invasion of Ukraine.

Reuters reported in November that since 2018 Binance has processed Iran-related transactions worth $8 billion, despite the sanctions against the country.

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