Vystoupení guvernéra na UChicago: v duchu Friedmana

Zkrocení inflace, nákup bitcoinu a vývoj nástrojů AI
(Buying Bitcoin, Building AI, and Beating Inflation)

Aleš Michl, guvernér ČNB

Konverzace s Ľubošem Pástorem *
University of Chicago Booth School of Business
10. února 2026

* Ľuboš Pástor je profesorem financí na University of Chicago Booth School of Business

Přepis diskuze s Ľubošem Pástorem (anglicky)

Governor Michl, welcome to the University of Chicago. Even though you’ve earned your PhD elsewhere, I wonder if it’s fair to say that this is your real intellectual home, because I’ve heard you talk about money supply driving inflation---a view famously advanced by Milton Friedman, a leading figure of the Chicago School. So, is Chicago your intellectual home?

Thank you for having me. Yes, Milton Friedman is my hero. One of the first economics books I ever read was Friedman and Schwartz’s A Monetary History of the United States, first published in 1963 (Friedman, Schwartz, 1963). I even brought my copy all the way from the Czech Republic. There’s a fold-out chart in that book with a powerful message: in the long run, money and inflation move together. If you want to tame inflation, you have to follow the money—slow excessive money growth, support saving, and keep interest rates above inflation over time.

Beating Inflation

Last year, you received two major central banking awards---both the Banker magazine and Central Banking named you the Governor of the Year. Congratulations!

Thank you. I really appreciate that. This is the work of the whole Czech National Bank team.

I suspect a big part of the reason was your success in fighting inflation. When you became governor, in July 2022, you inherited one of the highest levels of inflation in Europe, almost 18%. You immediately pledged to get it down to 2% within two years, and indeed, in less than two years, by February 2024, it was down to 2%, and it’s been close to 2% ever since. How did you achieve that?

Long story short: in the Czech Republic, for more than ten years before Covid the key central bank interest rate was below inflation. That motivated everybody to spend. We also had a weak-currency policy—the CNB actively weakened the Czech currency and increased the amount of money in the economy (Michl, 2025). This contributed to core inflation peaking as the highest in the EU during 2022. I was appointed governor at that time, and we had to act fast.

We completely changed the logic of monetary policy—from motivating people to spend to motivating them to save.

We kept the policy rate at 7 percent.

We said publicly that we would keep the rate higher than before, and for longer.

I also publicly declared a strong koruna policy. The koruna strengthened to a record level against the euro, without any direct FX intervention.

And it was enough. Sometimes less is more.

Since 2023 (January—ex-ante, December—ex-post) our interest rates have been higher than inflation. For 25 months in a row inflation has been close to 2 percent.

We innovate in technology and operations, but we remain conservative when it comes to fighting inflation.

Why did you decide to keep the interest rate at 7% instead of raising it, as your own internal DSGE model suggested? What’s wrong with DSGE models?

What went wrong is that our DSGE model largely underestimated the role of money (Central Banking, 2025). During a period of rapid money growth, growing debt, and rising asset prices, the model recommended keeping rates close to zero for more than ten years to push inflation up. Then, when high inflation arrived, that same model recommended raising rates to 10 percent or more to fight it. I found that crazy. That’s why we need to keep interest rates higher for longer compared with pre-Covid levels—to erase the inflationary pressure that built up over more than ten years.

“Higher for longer” would not be a popular political slogan in the U.S. right now. As I’m sure you know, there is political pressure on the Fed to cut the rates and keep them low. Did you feel any pressure to cut the rates, any political opposition to “higher for longer”?

Yes—but I strongly support free speech. Politicians, businesspeople, and members of the public have the right to hold any opinion, including criticism of the central bank. But the Bank Board has a duty to make decisions independently of those views.

Where do you see inflation going in the future? Will the growing amount of public debt play a role?

High inflation can still return in Europe. In my view, the main risk is a sharp rise in public debt. That’s why central banks should remain strict: keep the policy rate above inflation, support saving, and remind people that the economy is not only about spending.

In the Czech Republic, our policy rate is now 3.50%, inflation is 1.6%, and our outlook is around 2%. Core inflation is around 3%. If we see declining momentum in core inflation, we may have some room to cut rates, but we’ll still keep the policy rate higher for longer compared with the pre-Covid period. Otherwise, we are keeping all options open.

Central Bank as a Sovereign Wealth Fund

Central banks tend to be very conservative investors, holding mostly safe assets like Treasuries. In comparison, the CNB has been willing to take on much riskier bets, even before you took over. For example, you’ve held equities for many years. What fraction of your portfolio is in equities? Which equities? What is the economic role of equities in your portfolio?

We manage a portfolio worth USD 176 billion. That’s about 45% of GDP. Relative to the size of the economy, it’s one of the largest central bank portfolios.

When I started at the CNB we had 7.65% in equities. Now we have 26.2%. We had 0% in gold; now we have 6%.

We have 50.1% in bonds.

Cash and money market instruments account for about 17.3%. 27.8% is invested in USD and 49.4% in EUR.

The economic role of equities is to increase diversification and raise expected returns over the long run (Adam, Michl, Škoda, 2023).

A common view is that the sole purpose of a central bank’s asset portfolio is to support financial stability. That’s why central banks tend to hold mostly safe assets. Is it fair to say that you believe that it is also important for a central bank to make profits for the Treasury?

According to the law, our goals are price stability and financial stability. But we also deliberately made the job a bit harder for ourselves by taking on the challenge of improving the bank’s profitability. When I became governor, the expected return on our assets was lower than the cost of our liabilities. We turned that around. We now hold more equities and gold, and the expected return on our assets is higher than the cost of our liabilities.

Does your view have anything to do with the CNB’s negative equity?

I hate losses and I like profitability—that’s in my DNA. But priority number one is low inflation.

I understand you have increased your holdings of gold and plan to increase it further. Can you please explain why? Aren’t you worried about buying more gold at a time when its price so high?

We have been buying gold since 2023. We buy it regularly, every month—about 1.75 tons per month. We will not change this strategy, our target is 100 tons.

We are buying gold to diversify our foreign exchange reserves (Adam, Michl, Škoda, 2023). Gold is a diversification asset; it has close to zero correlation with equities. We need it for the long term. As a central bank, we have a never-ending investment horizon. That’s why we don’t try to time the market. This is basically Markowitz—University of Chicago, Nobel Prize—diversification comes from low correlation (Markowitz, 1952).

Buying Bitcoin

About a year ago, you were all over the news when you announced your intention to invest up to 5% in bitcoin as a way of diversifying the CNB’s reserves. Have you purchased any bitcoin since then?

Yes. But we have started slowly and created a test portfolio of digital assets, outside of our foreign exchange reserves, including bitcoin (Adam, Michl, 2025).

Why? Can you please explain? What role does bitcoin play in a central bank’s portfolio?

There are very few assets with near-zero correlation to equities or bonds. In a large portfolio, you need some of them to improve diversification. Bitcoin’s potential advantage is that its correlation with bonds has been low. The challenge is that its history is still short. We have known gold prices for a little over 100 years. Bitcoin has a market price history of only about 16 years. Its future value could be very high, or it could go to zero. Both are possible. This kind of valuation uncertainty is typical for new technologies, where investors learn over time about long-run productivity and payoffs (Pástor & Veronesi, 2009).

In our new paper (Adam, Michl, Škoda, 2026), published today, we ran a simple what-if exercise. We asked what would have happened to the CNB’s reserve portfolio if we had added a small share of bitcoin. Using the full 2010–2025 dataset, bitcoin looks like a very strong diversification asset. A 1% bitcoin allocation would have raised average returns much more than a similar increase in equities or gold, while increasing overall portfolio risk by less (per unit of return). In CZK terms, returns rise and volatility is almost unchanged, so bitcoin acts as a diversifier.

I don’t think any other major central bank holds bitcoin. Do you think other central banks will follow?

It’s not my job to tell other central banks what to do.

Tell us more about your Digital Assets Pilot. What will you be looking for as you evaluate its success?

We launched the portfolio in November 2025. It is not part of the FX reserves.

The initial investment is USD 1 million. This amount will not be increased.

The portfolio will include bitcoin, USD stablecoins, and USD tokenized deposits.

A full evaluation is expected in two to three years. We will judge success mainly in terms of learning and our ability to operate, not in terms of short-term profits.

We will test different ways to buy and sell. We will test custody, crisis handling, AML compliance, and accounting. And we will build expertise. Learn. Understand. Prepare for the future.

How do you see the future of stablecoins?

For me, stablecoins are part of tokenization—and tokenization is the future. Tokenization is a big disruptive shift, like the move from CDs to music streaming. The value is the same, but it’s easier to use and move.

But tokens come with new risks, just like music streaming had growing pains. Remember Napster. Remember the early days of iTunes. Even today, artists still fight about rules and payouts—my favorite band, Massive Attack, has criticized Spotify and released new remixes on Tidal instead.

It will be similar with tokens and their providers. A lot will depend on the legal clarity of the backing and on how cash-out works under stress. After the Silicon Valley Bank failure, USDC briefly traded below $1, a reminder that “stable” is not the same as risk-free.

Have you considered launching your own CBDC---a digital crown?

No. If the goal is fast and cheap payments, instant payments are a better solution. I’m a liberal in the Friedman tradition—I prefer market-based solutions. The state, and the central bank, should provide the infrastructure.

In the Czech Republic, the central bank provides the instant payments infrastructure (Karhánek, Malovaná, Michl, Trubelík, 2025). Over the last four years, we have improved it so that everyone can use instant payments.

Building AI

Central banks are generally not known to be leading innovators; they tend to prefer to be seen as pillars of stability. You clearly have a different view; why?

With instant payments, it sometimes feels like we’re doing something that Elon Musk and Peter Thiel already figured out with PayPal back in 2000. We are not the biggest innovators, but we have improved a lot—we have moved forward. I don’t want to fight the future; I want to help create it.

Do you use AI at the CNB? How? (Inflation nowcasting/forecasting? Supervision?)

Yes. In one year, we have made strong progress. We use AI to improve inflation nowcasting—we even wrote a blog post about it (Adam, Michl, Švéda, 2025). In supervision, we use AI as a first check to see whether all required documents are included.

Shared environments: Python, MATLAB, R, and Julia, with access to offline LLMs, including Llama, OpenAI GPT, Mistral, IBM Granite, and Gemma, and other machine learning models. ChatGPT Enterprise, Microsoft Copilot… Additional models in use: Claude, Llama, Grok, Gemini, and RAG systems.

Do you plan to increase your use of AI in the future?

Yes, significantly. In February, we added four new NVIDIA H200 GPUs to start testing our own AI models in-house. It’s a starting point, not a giant training cluster. We will invest further in AI and cybersecurity.

You recently introduced instant payments nationwide. Are they popular? How do they operate? How many other central banks have introduced instant payments?

The Czech National Bank operates the system for payments between banks.

Seven years ago, such payments could take up to two days to clear. We upgraded the system, and it now supports instant payments 24/7.

Since last year, all clients have had access to instant payments in CZK. Transactions clear within seconds. All the major banks offer instant payments.

For retail payments, the new system could be up to 50 times cheaper to operate than payment cards. We will leave it to the market to develop new payment apps, but we will set the rules.

Other Questions

After Bulgaria joined the Eurozone last month, Czechia is one of only 6 EU countries with its own currency. There are some political forces in your country pushing to adopt the euro. How do you see the pros and cons of the euro versus your own currency?

Our strong koruna policy helped us a lot in the fight against inflation (Michl, 2022). That’s why I support keeping the koruna in the Czech Republic (Michl, 2025, and Friedman, 1989).

What are the main challenges for Europe today?

Governance. Europe needs fewer bureaucrats, less red tape, and more delivery, so better governance is essential. Leading by example, at the Czech National Bank we cut staff by 5% early on, and it increased clarity, ownership, and performance. We pay people well, but we demand results.

What are the main challenges for central banks around the world today?

Inflation.

You have clearly done many things right. Have you made any mistakes?

Absolutely—claiming no mistakes would be my biggest mistake. One mistake was that we kept some internal processes too complex for too long, and it held back decision-making. That’s also why we are now finishing a second round of simplification at the central bank, cutting bureaucracy and speeding up execution.

References

Adam, T., & Michl, A. (2025). First test portfolio of digital assets at the CNB. cnBlog, Czech National Bank. https://www.cnb.cz/en/about_cnb/cnblog/First-test-portfolio-of-digital-assets-at-the-CNB/

Adam, T., Michl, A., & Škoda, M. (2023). Balancing volatility and returns in the Czech National Bank’s foreign exchange portfolio. Research and Policy Note No. 1/2023, Czech National Bank.

Adam, T., Michl, A., & Škoda, M. (2026). Addendum to: Balancing volatility and returns in the Czech National Bank’s foreign exchange portfolio. Addendum to Research and Policy Note No. 1/2023, Czech National Bank

Adam, T., Michl, A., & Švéda, J. (2025). First use of AI in inflation forecasting at the CNB. cnBlog, Czech National Bank. /en/about_cnb/cnblog/First-use-of-AI-in-inflation-forecasting-at-the-CNB/

Central Banking (2025, March 20). Governor of the year: Aleš Michl [Interview]. /en/public/media-service/interviews-articles/Governor-of-the-year-Ales-Michl/

Friedman, M. (1989, December 18). The case for floating exchange rates. Financial Times.

Friedman, M., & Schwartz, A. J. (1963). A monetary history of the United States, 1867–1960. Princeton University Press.

Karhánek, T., Malovaná, S., Michl, A., & Trubelík, I. (2025). Instant payments in Czechia: Adoption and future trends. Czech National Bank Working Paper No. 4/2025, Czech National Bank. /en/economic-research/research-publications/cnb-working-paper-series/instant-payments-in-czechia-adoption-and-future-trends/

Markowitz, H. (1952). Portfolio selection. The Journal of Finance, 7(1), 77–91.

Michl, A. (2022, November 23). Policy for a Strong Koruna. CNB Discussion Forum, Faculty of Economics and Administration at Masaryk University, Brno.

Michl, A. (2025, June 10). Governor’s notes on euro adoption (Panel discussion remarks). Bloomberg Event: The future of the euro in CEE, Prague, Czech Republic. /en/public/media-service/speeches-conferences-seminars/presentations-and-speeches/Governors-Notes-on-Euro-Adoption/

Pástor, Ľ., & Veronesi, P. (2009). Technological revolutions and stock prices. American Economic Review, 99(4), 1451-1483.