Absence of a CBDC in the USA is not the prime motivation for the Libra proposal. Even if one existed in the USA at the retail level (it exists at the wholesale level in many respects), the Libra proposal goes far beyond a reserve currency power play. It posits a dramatically different kind of economy and distributed cross-border linkages between individuals for high volume, low-value transactions. It does not address how economic growth would be fostered at scale. And The Reserve structure leaves many, many issues up to the imagination.

Any efforts to launch an alternative reserve currency (not just the USD, but also the EUR, JPY, and SFR) must first credibly address operational and functional issues regarding systemic risk, spillover effects, and supply/demand (monetary policy) matters. The Reserve is not a credible proposal; one can only hope that the publicly released paper is only for retail consumption and that more thoughtful, substantive architectural elements are at least under consideration if not under construction.

The defection of the major global retail payments systems from the Libra structure materially and adversely impact the proposal’s ability to reach the lofty goals of launching a successful and scalable global currency in general even without positing reserve currency ambitions.

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