The June 22 editorial “Is the world ready to bank with Facebook?” worried that the Libra Association, which would oversee Facebook’s proposed digital currency, could change the currency basket that would determine its issue and redemption value. There is a win-win solution to that problem. The International Monetary Fund’s Special Drawing Rights’ (SDR) value is also determined by a basket of currencies (the dollar, euro, pound sterling, yen and renminbi). The composition of the SDR’s valuation basket is established by international agreement following a well-specified and transparent process. The Libra should irrevocably fix its value to one SDR. That would strengthen the status of the Libra but also contribute to enhancing the IMF’s SDR as a supplement or substitute for the dollar in international reserves, as called for in the IMF’s Articles of Agreement.
Warren Coats, Bethesda
The writer was chief of the International Monetary Fund’s Special Drawing Rights division from 1982 to 1988.
The editorial about the launch of Facebook’s Libra cryptocurrency said that “Libra’s infrastructure will be run by trusted partners.” Trusted by whom? The term “trusted partners” often refers to shared interests or goals, but the parties that will ante up a minimum of $10 million to buy in to Libra have no fiduciary responsibility to people who transact in or hold Libras.
Eric E. Painter, Columbia