To protect consumers, not only will the Diem (formerly Libra) stablecoin have at least one-to-one reserve backing, but it won’t allow the digital currency to be fractionalized or leveraged elsewhere. Christian Catalini, Chief Economist at the Diem Association, explained how during an OMFIF webinar.
OMFIF is a central bank think tank, and given the audience, Catalini was positioning Diem as a highly regulated and conservative stablecoin compared to the others currently available.
“There’s a tremendous amount of innovation happening in spaces like DeFi decentralized finance, but when you think about payments, it’s especially important to think about what kind of risk does leverage in the system through all sorts of very complex smart contracts and financial assets introduce into a payments network,” said Catalini.
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