Libra's Future Financial Strategy

Relatively secure currencies/financial markets in Europe/US follow a low-interest rate policy and sometimes even negative interest rates to incentivize spending, The document The Libra Reserve" states that the reserve will invest in securities (short-term) and bank deposits, which won’t yield any significant returns in current market conditions. In my opinion there are these scenarios and options:

  1. Strong focus on transaction fees, which might kill off frequent usage, especially as an alternative to cash, because cash-transactions are free of charge. The fees contradict the claim that Libra will enable people that were previously excluded from traditional financial markets, because the entry fees and transaction costs are one of the reasons for not opening bank accounts.

  2. Mimicking a bank: Libra users will have the ability to offer loans in Libra to other users, writing the conditions/time-line etc. into smart contracts. The debtor pays interest to the Libra lender and a small kick-back fee to the Libra reserve.

  3. Investments in other asset classes: As most banks/insurers etc. if might be a viable option - in my opinion the most likely one - that the Libra Association will deviate from just investing in securities and rather seek a balanced portfolio mix of real estate, land, bonds, stocks and venture capital/seed funding for equity. This could make the Libra Reserve, depending on the adoption rate and reserve volume, a powerful actor on the financial markets (e.g. Blackrock that invest in stocks and bonds for their ETFs)

  4. Introducing new parameters to measure “return” --> Libra could deviate from just measuring pecunary return as our current financial systems do, but also “put a price” on positive social and environmental impact. Hence, Libra users/validators who would normally receive a pecunariy dividend could opt for a social/environmental dividend in the form of social project funding, reduced CO2 emissions, increased biodiversity, nature conservation projects and much more.

I am keen to hear your feedback and discuss my ideas further!

Best,

Viktor

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Have you try read their white paper and others docs? Because many of general questions from this group already covered by those docs. I also just download those, and as far as I know, still enough for Libra’s first step, also as long as the Association stick to what they write. So, I hope you will found those answers from the docs.

Cheers :slightly_smiling_face::coffee:

I have read the parts that should answer my questions, not just in the whitepaper, but all the other available documents. Would have been nice to hear some constructive input, especially from the Libra team who might have some background info.
Best,
Viktor

1 Like