Libra is backed by a basket of currencies or investments designed to spread risk around, which is a great idea unless a huge chunk goes belly up at the same time. And then what? We repeat the subprime mortgage crisis, where people also thought that there would never be mass defaults across the system at the same time?
Libra is not a bank, it’s a currency that’s pegged to other currencies. The asset backing is only because the initial value has to come from somewhere. It can’t default. It could decrease in value, but there’s no debt or counter party risk.
A run on a currency is still pretty disastrous for everybody involved, hence the need for a bank of last resort to shore up the currency when that happens.
All these alternative currencies look like they're solving a political science problem, not any actual problems that people have.
I'm thinking it's more about solving developing country problems vs. developed country problems. If your local currency is becoming zimbawbe, WhatsApp has a stable currency you can buy into with the local money changers and still is as convenient as mpesa.
A run on the currency just becomes a run on the underlying currencies, which, as a basket of global currencies, cannot all be run at once since each one is inherently relative to the others.
But if a huge chunk of major global currencies go belly-up at the same time the world has much larger issues than Libra taking a, say 20% dive - the volatility in all kinds of sectors would dwarf that.
All other aspects of the design strike me as either dumb, redundant or dangerous, but this would be the one part of the system not to worry about.
