Libra co-creator talks global finance and central banks with ING

On Tuesday, Libra co-creator Christian Catalini spoke with ING’s lead economist for digital finance, Teunis Brosens, about global economics and regulation. They appeared on the Official Monetary and Financial Institutions Forum’s (OMFIF) podcast, hosted by Bhavin Patel.

How will Libra be minted?

Catalini, also head economist at Facebook subsidiary Calibra, outlined how new Libra would be generated. Tokens will be minted in exchange for fiat currency, which would then be placed into the reserve. The reserve will partly be used to purchase short-term government debt. Libra can be exchanged back for fiat, then the token is burned, and the money returned. So, “Libra doesn’t have any discretion of […] when to mint the coins, or when to destroy them. The market decides when they are needed.” But, as Brosens points out: “By being a successful coin, Libra will, in fact, influence existing financial markets […] because it is a large buyer of safe assets or a large seller of safe assets. I think in practice, there will be influence on monetary policy and financial markets.”

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