Taiwan Considers Bitcoin for Financial Defense Amid Risks

As Taiwan grapples with rising global inflation and escalating geopolitical tensions, lawmakers are raising an important question: Should Bitcoin be included in the nation’s financial defense strategy?

Taiwan’s economy, heavily reliant on exports, is increasingly vulnerable to fluctuations in the global market. The value of its currency, the New Taiwan Dollar, has seen significant volatility, exacerbated by global inflation and international conflicts. While Taiwan holds a substantial 423 metric tons of gold and approximately $577 billion in foreign exchange reserves, over 90% of these assets are tied up in U.S. Treasury bonds. Experts warn that in the event of a major conflict or financial crisis, these traditional reserves could lose value or become inaccessible, casting doubt on their effectiveness in times of crisis.

In response to these concerns, Taiwan legislator Ko Ju-Chun has proposed a bold solution: adding Bitcoin to the country’s national reserves. Ko argues that Bitcoin’s decentralized nature and fixed supply of 21 million coins make it a viable hedge against inflation and global risks. Unlike traditional assets like gold or U.S. dollars, Bitcoin is harder to control, offering Taiwan more financial flexibility in uncertain times. Ko emphasizes that the proposal is not to replace gold or the U.S. dollar, but rather to incorporate Bitcoin as a small yet strategic addition to the country’s financial portfolio.

Ko’s proposal has garnered support from influential figures such as Former Premier Chen Cong, who acknowledges Bitcoin’s role as a powerful asset against inflation, even if it is not widely used as everyday currency. Professor Liu Yiru from National Taiwan University also notes that Bitcoin’s limited supply differentiates it from traditional fiat currencies, which can be devalued through mass printing during financial crises.

Taiwan’s contemplation of Bitcoin as a reserve asset aligns with growing global interest. In the United States, New Hampshire has recently passed the Bitcoin Reserve Act, officially incorporating Bitcoin into its state financial reserves. Other regions are similarly exploring the potential benefits of integrating Bitcoin into their economic frameworks as they prepare for future financial uncertainties.

As Taiwan considers this innovative step, the debate over Bitcoin’s role in national financial strategies is heating up, with both opportunities and risks to weigh in the face of an unpredictable global economic landscape.