What is Facebook’s Libra Reserve?
Facebook Libra’s Reserve is a basket of historically stable currencies that solves two problems:
- To retain the “offline” value of Libra coin while it’s used for online transactions. Effectively making it a reserved currency.
- To keep the cryprocurrency value stable and non-volatile.
According to publications and as explained in my blog post – – The reserve basket will initially consist of a mix of stable currencies (such as Japanese Yen, Swiss Franc, British Pound, Euro and USD).
Unlike some other cryptocurrencies (such as Bitcoin), Libra is designed as a stablecoin which provides advantages over volatible cryptocurrencies, especially in e-commerce transactions (small purchases online) and cross border money transfers. In both cases it’s important that (1) vendors can keep consistent pricing without having to update it on daily basis due to cryptocurrency volatility; (2) both sides of a money transfer transaction know that the value they are transacting isn’t going to significantly fluctuate between money sent and money received.
You can read more about Facebook Libra in our executive summary blog post: