JPMorgan explains why they consider Libra unstable

Facebook's Libra digital currency is vulnerable to economic shocks, writes Bloomberg, citing analysts at banking holding JPMorgan. According to them, she will not be able to provide the level of security that existing payment systems offer.

First of all, we are talking about a bottleneck problem – when network bandwidth is limited, and the activity of participants does not stop growing.

JPMorgan emphasized that Libra and stablecoins can take a significant share of global transactional activity in the future, but their mechanisms of operation are different from traditional payment systems. That is why network paralysis in the midst of a crisis can have negative macroeconomic consequences.

Analysts also pointed out that the development of the Libra ecosystem and operating expenses for network maintenance should be covered by the profitability of the reserve, however, most of the assets in the reserve currently show negative returns. The company is confident that this makes the system unstable.

Recall, Facebook introduced the digital currency Libra in June. Many details regarding its operation were revealed by Calibra CEO David Marcus, speaking in the US Congress.

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