Last year the European Commission opened a broad consultation about regulating digital assets and cryptocurrencies or what it refers to as crypto-assets. The deadline was March 2020, and in June it published numerous responses including from Calibra, the Facebook Libra wallet, which has since been renamed to novi. The company is a subsidiary of Facebook, unlike Libra which claims to be an independent entity. In some ways, the response reveals some similarities in Libra’s structure and how a central bank would issue money.
An interesting statement by Calibra in the EC response is that Libra does not create a direct redemption right for users. It previously stated this indirectly. In its second whitepaper, Libra outlines the role of several “Designated Dealers to extend liquidity to consumer-facing products, such as wallets and exchanges.” These organizations will be “regulated, well-capitalized financial institutions.”
So it is only these Designated Dealers that can redeem funds. There are parallels here with central banks that issue cash to commercial banks who then distribute it.
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