Facebook has come up Libra its version of crypto-currency.
The unique feature of Libra is the "reserve" which backs Libra. The reserve is supposed to be held in stable global currencies (USD, GBP, JPY and EUR).
For a Libra coin to be created and equivalent amount of local currency (based on exchange rate) needs to be transferred to Libra reserve. I am assuming that during this transfer the local currency is converted to USD/GBP/JPY/EUR and then transferred to the reserve.
Essentially for every Libra that is in circulation its equivalent amount is held in its reserve.
Given this, I am assuming that:
Libra would behave like Hong Kong dollar against USD and it would remain stable against USD, GBP, JPY and EUR
There would be volatility in the price of Libra against the local currency (except for USD, GBP, JPY and EUR).
Are these assumptions right?