Aleš Michl, the head of the Czech National Bank (CNB) who proposed exploring the Bitcoin reserve option, has been named “Governor of the Year” by the Central Banking Journal. The magazine praised his role in taming inflation and highlighted his efforts to diversify the CNB’s portfolio, including by considering an investment in the cryptocurrency as a reserve asset.
Michl took over as CNB governor in July 2022 and has since proven himself as anything but a traditional manager of a monetary authority. He is not afraid to differ from peers and colleagues and his unconventional approach to stabilizing prices while maintaining a strong national currency has won him recognition.
CNB’s Aleš Michl credited for bringing down Czech inflation
When Michl, a former investment banker, stood at the helm of the CNB, the Czech Republic had one of the highest inflation rates in Europe, at over 17%. Under his unorthodox leadership, the bank brought it down to 2% by February 2024, within the two-year period he had promised.
The bank’s board ignored some of CNB’s own models suggesting an increase of the base interest rate to 11% to prevent rising inflation expectations, deciding instead to keep it at 7% at the time, pointing to declining domestic demand and high household savings among reasons to do so.
Maintaining a sufficiently restrictive key rate for longer, instead of significantly raising it and then cutting it back soon after, sent a signal to Czech companies that they could rely on stable interest rates, which would remain higher only as long as necessary.
Policy insight for a small, open economy like Czech rep.: Higher inflation after a shock doesn’t always signal overheating or the need for immediate rate hikes. It may simply reflect starting from a lower price level. In other words: interest rates should have been higher during…
— Aleš Michl (@MICHLiq_) March 22, 2025
Michl and his team also implemented a “Policy for a strong koruna,” designed to bolster the national fiat by partially selling income generated from international reserves. By the end of 2023, the CNB had sold €1.2 billion ($1.3 billion), Central Banking detailed in an article.
The strong koruna strategy lowered import costs, helping Prague to further tame prices in the country. The Czech National Bank had established that it’s mainly dealing with “imported inflation” due to higher costs of imports such as energy.
‘Governor of the Year’ motivated to experiment with Bitcoin reserve
Besides inflation and monetary policy, Aleš Michl demonstrated flexibility regarding central bank assets as well. Under his watch, the CNB significantly increased the share of gold in its €140-billion foreign exchange reserves, from 8 to 46 tonnes, and almost doubled its equity holdings with the stated goal to diversify and increase returns.
Michl then tabled a proposal to “analyze the possibility of creating a Bitcoin test portfolio” which was accepted by the CNB board members at the end of J anuary. “This step is motivated by a desire to learn about and try out this highly risky alternative asset,” he told the magazine.
Bitcoin Update:
I’ll start broadly: if you intend to invest in crypto assets, exercise extreme caution. The market is still in its infancy. I remember the 1990s in our country, when the transition from socialism to capitalism saw the birth and simultaneous collapse of many… https://t.co/UxGF0R7NwO— Aleš Michl (@MICHLiq_) February 19, 2025
The announcement that the CNB may consider putting up to €7 billion into Bitcoin was not met with enthusiasm by his peers across the Old Continent and even colleagues at the bank’s board. Some expressed the usual concerns that the cryptocurrency is used to facilitate illegal activities, its mining requires a lot of energy and that it’s not really a currency.
President of the European Central Bank (ECB) Christine Lagarde stated she is “confident that Bitcoin will not enter the reserves of any of the central banks of the General Council” of the ECB after having what she called a “good conversation” with Michl. And this week, CNB board member Jan Kubicek said he is “skeptical” regarding adding Bitcoin to the bank’s reserves.
The “Governor of the Year” admitted that in time Bitcoin holdings can be worth “either zero or a huge amount” due to cryptocurrency’s price volatility. He emphasized that the CNB board will decide how to proceed based on the results of the proposed analysis and assured that “no changes will be implemented in this area until then.”
Central Bank’s award goes to the Czech Republic for the first time, the daily Hospodářské Noviny noted in a report. Previous holders of the prestigious title include former ECB President Mario Draghi and former Bank of England Governor Mark Carney. Earlier this year, Aleš Michl was also named European Governor of the Year by The Banker, another industry magazine, owned by the Financial Times.
