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Comment by illumin8 | Hacker News Reader

The whole premise of this article is that Libra will be financially insolvent and will need to be bailed out.

This makes a pretty huge leap from "Facebook = bad" to the Libra foundation not having sufficient controls on their treasury and becoming insolvent because they didn't actually back every Libra coin with real currency.

Say what you will about Facebook, I'm certainly not a big fan of their track record on privacy, but they're doing this right. They're setting up an independent foundation with representation from 100 companies, and every one of them has an equal vote. The Foundation will be regulated by swiss banking law, which is one of the most strict in the world, so I would be highly skeptical of any claims that they will be "insolvent" any time soon.

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The definition of cryptocurrency includes the language "operating independently of a central bank". These ~100 stakeholders sound somewhat analogous to federal reserve branches. It's a pseudo central bank. The U.S. should be raising huge red flags about Libra. If financial transactions in US dollars decline, and Libra increases, it reduces the United States' ability to conduct effective monetary policy. But, if Libra can't exist in a stable manner, as all other cryptocurrencies have failed to do, perhaps the problem will resolve itself, and the dominate nature of the U.S. Dollar will continue.

If you live in the United States, you don't want Libra to succeed. You don't want your paycheck in Libra, you don't want mortgage payments in Libra. You want a central bank that has some capacity of providing stability to our economy.

This is doubly true because zuck bucks will undermine the position of the Dollar as the world's reserve currency. Facebook is giving yen, euro, etc. a say in the value of the coin.

Also she mentions as why it should be banned the "debacle with money market funds in September 2008" where lots of people tried to cash out at once and "US Federal Reserve stepped in to offer liquidity support." To which I say big deal - I don't think the FED lost any money - why shouldn't it help out to the benefit of investors. That said I don't think it would bother with the Libra or similar.

> That said I don't think it would bother with the Libra or similar.

I think that's the whole point. The author isn't saying the FED bailout was bad, in fact I understood the opposite: they're saying it was a good thing but that it would be hard to pull off in a Libra-based market.

> A run on Libra would require support on a much larger scale, as well as close coordination among all central banks affected by it.

The author doesn't think that this kind of coordination is realistic/feasible in Libra-land, and therefore no bailout would occur, and therefore Libra holders would be left with nothing.

At least that's what I interpreted.

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