tag:blogger.com,1999:blog-6704573462403312459.post822582223147998603..comments2024-03-28T06:53:23.473-04:00Comments on Moneyness: A fifty-year history of Facebook's LibraJP Koninghttp://www.blogger.com/profile/02559687323828006535noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-6704573462403312459.post-5587384506642026102020-01-04T03:03:54.805-05:002020-01-04T03:03:54.805-05:00What does it mean when we say the value of Libra i...What does it mean when we say the value of Libra is pegged to a basket of currencies. And how fluctuations in the value of these currencies will affect the value of one Libra. Libra is predicted to be popular later. Because before its appearance was hot and many parties agreed ... :)Nerfx Shanhttp://www.nerfx.comnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-76947869756339629042019-09-30T09:16:53.025-04:002019-09-30T09:16:53.025-04:00Spot on analysis!!Spot on analysis!!T Parkhttps://www.blogger.com/profile/11210989009384713433noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-59279677517498401832019-09-30T06:23:16.803-04:002019-09-30T06:23:16.803-04:00Hi yyy, of the top of my head I don't know of ...Hi yyy, of the top of my head I don't know of any private units of account that use a basket of consumer goods and services. <br /><br />Sorry about the forum delay, I'll try and get to it. Have been a bit swamped.<br />JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-45897670580493939512019-09-26T03:29:42.665-04:002019-09-26T03:29:42.665-04:00What about a private unit-of-account of goods and ...What about a private unit-of-account of goods and services (like CPI)? Do you know some examples?<br /><br />(I have also a question waiting on the forum, about CPI. Thanks in advance!) yyynoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-89218067194185571602019-09-25T06:12:59.815-04:002019-09-25T06:12:59.815-04:00A unit of account like the SDR is defined as a bas...A unit of account like the SDR is defined as a basket of currencies. It's simply a mental calculation. We could create a Wills unit of account right now. Just mix 0.2 GBP, 0.5 USD, and 0.3 euros together. Voila, the Wills.<br /><br />It's only when an actual Wills financial instrument is created that a peg has to be created. Something has to lock the instrument to the Wills unit of account. If I recall, the IMF has a redemption mechanism. That's what locks tradeable SDR units to the SDR unit of account.<br /><br />See more here: http://jpkoning.blogspot.com/2013/05/imf-sdrs-worlds-largest-lets.html<br /><br />As for the question of reserves, I'm not sure yet if we know exactly how things will play out if Libra breaks the buck. My guess is that Facebook and its coalition would bail it out. That's what typically happens when a money market mutual fund breaks the buck; its parent or sponsor tops it up.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-2433205446158848852019-09-24T12:49:03.830-04:002019-09-24T12:49:03.830-04:00I consider myself a relatively good economist and ...I consider myself a relatively good economist and have a reasonable understanding of monetary economics, but I always get in a tangle when it comes to SDRs and baskets of currencies. <br /><br />What does it mean when we say an SDR or Libra's value is pegged to a basket of currencies. And how will fluctuations in the value of those currencies influence the value of one Libra/SDR when considered in one country's domestic currency?<br /><br />I also don't understand how the reserve fund works. I understand the vague notion that Facebook and partners get seignorage from issuing libra (i.e. returns on the asset portfolio backing libra) but what happens to the value of libra if the reserve fund tanks. Do they take on the risk and return in both directions or is there some mechanism for libra token holders to absorb the downside but not the upside. <br /><br />Sorry for all the questions, I am just in a colossal muddle about it all. Chris Willsnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-33247545677149218952019-09-24T09:39:47.086-04:002019-09-24T09:39:47.086-04:00Thanks Amol. Yep, the Canadian dollar might make m...Thanks Amol. Yep, the Canadian dollar might make more sense than the Singapore dollar, but the most important is to have an actual rule for generating the basket. We'll see if Facebook ever makes that rule public.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-45447493198509822162019-09-24T07:54:46.852-04:002019-09-24T07:54:46.852-04:00Superb post as always. Thanks for the earlier pape...Superb post as always. Thanks for the earlier paper on artificial currency units. It is odd to see Singapore Dollar be given 7% weight. It should instead be the Canadian Dollar :-)Amol Agrawalhttps://www.blogger.com/profile/08449002138214579388noreply@blogger.com