Libra ' s Unresolved Puzzles

By now everyone has heard of Libra, the new private digital money system announced last week, sponsored by Facebook and a consortium of other firms, to be rolled out in 2020. The project ’sofficial white paper, “An Introduction to Libra,” calls it “a new decentralized blockchain, a low-volatility cryptocurrency, and a smart contract platform.” A second officialdocument on “The Libra Reserve” goes into more detail. An overview of the system’s potential by Diego Zuluaga is availablehere, a more critical view by Stephen Williamsonhere. Alarmed denunciations of Libra for being too corporation-y can be foundhere andhere.Let ’s put aside the questions of how decentralized Libra will really be, what kind of blockchain it will employ, and its use in smart contracting, to focus on the question: Exactly what kind of money will it be? I find that the white papers under-specify the core mechanism that is supposed to control the value and quantity of Libra. My best guess is that Libra is meant to be like a mutual funds share, redeemable (by authorized resellers, not by the public directly) at the net asset value of a low-risk mutual fund diversified across several fiat currencies.First, a verbal and symbolic aside: The “libra” historically was amedieval monetary unit. In Latin,libra is singular noun meaning “pound” or “scale” (plurallibrae). Historically this is why the sign of the British Pound is £, a cursive capital L. In the Libra white papers, “Libra�...

Source: Cato-at-liberty - July 2, 2019 Category: American Health Authors: Lawrence H. White Source Type: blogs