The reserve will be invested in low-risk assets that will yield interest over time. The revenue from this interest will first go to support the operating expenses of the association — to fund investments in the growth and development of the ecosystem, grants to nonprofit and multilateral organizations, engineering research, etc
Since the assets backing Libra will be in government securities that generate returns to match inflation but then interest will be used for expenses and dividends, won’t Libra’s purchasing power depreciate overtime?
How does the reserve plan to generate positive yield safely when nominal interest rates for government securities are negative in many safe markets are negative? https://www.ecb.europa.eu/stats/financial_markets_and_interest_rates/euro_area_yield_curves/html/index.en.html
If Libra makes for a poor store of value compared with keeping fiat in interest bearing accounts, won’t users mostly use it purely as a way of transferring value in which case a relatively small Libra marketcap and reserves can support a high volume of transfers? Say $1 Billion in reserves to support $25-$100 Billion in annual transfers?
At $1 billion in reserves, will there be enough of a ROI for validators and network participants to operate?
Does Libra plan to release an economic feasibility study?