Ph.D. in Finance, Beijing Normal University: The 1:1 reserve issuance method becomes a difficult paradox for the Libra Association.

On August 6th, Zhao Wei, Ph.D., Ph.D., Ph.D., Beijing Normal University, published an article entitled “Returning to the Ancestors from Facebook” from the history of currency and payment. The article stated that, as pointed out by Keynes (1914) and others, the face value of coins It is always higher than the market price of the metal from which the coin is made, otherwise the holder of the coin will have the incentive to melt the coins in their hands into metal goods and sell them. Therefore, it is good for Libra, or for other so-called stable tokens that have already appeared or are about to be released, as long as the collateral value (or reserve) behind them is not lower than the price of the token, and can be passed through the token. Free redemption, then the market has enough motivation to "melt" it, Libra can only become a medium for exchanges for holders to exchange reserve currencies (especially the US dollar), and it is difficult to become a currency exchange medium to enter the market. On the other hand, this will cause a chain reaction, which will at least lead to the “insufficiency” of the token circulation, that is, when the circulation of the contemporary currency is less than a threshold (in terms of the increase in market share), the member institutions will not accept Libra. Such tokens are used as internal settlement assets. Thus the 1:1 reserve distribution method became a difficult paradox for Facebook Libra Association.