In a letter to Fabio De Masi, a politician, Facebook explained that Libra's stablecoin will be supported by 50% of the US dollar.
Filling the Libra Basket
In June, Facebook announced the development of its Libra stablecoin, and then assured that it would be supported by a basket of currencies to ensure stability.
What currency will prevail there? After the publication of the letter to the politician of Germany, Fabio De Maci, it became clear that it was the American dollar that would occupy the leading foreign exchange position in the ratio of 50%. The next places in the basket will take the euro (18%), the Japanese yen (14%), the British pound (11%) and the Singapore dollar (7%). Chinese currency yuan is missing. In turn, the land of the rising sun reacted by actively developing its own digital money and accelerating its preparations for launch.
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It should be noted that there is nothing unusual in supporting the dollar by 50%, if we take into account the strength of the currency itself and where Facebook comes from. The absence of the renminbi of China as a whole can be seen as a move by Facebook towards calming and supporting the US government. The reason for this is the well-known trade war between the United States and China. The states consider the weakening of the renminbi intentional on the side of China’s political forces, which contributes to the export of their goods to the United States.
It is the support of the Libra basket with other currencies that should prevent the stablecoin volatilityVolatility
– is a financial term that means a statistical indicator of price change. In the cryptocurrency world, it is used by traders as an indicator for managing financial risks. That is, it is a measure of trade risk and as a financial analytical tool for gambling. Details that is characteristic of current cryptocurrencies. But some European countries such as Germany or France are already starting to be worried about situations. Indeed, the predominance of the American dollar by 50% may threaten to undermine the integrity of their financial systems.
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