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The Libra's fiat reserves are themselves a lever over nation-states. At any time, the Libra Association can threaten to dump one fiat on the market for another, and that is assuming they even want to sustain a reserve ratio.
There seems to be some confusion how exactly this gives Libra leverage.
Imagine that most people use Libra (backed by fiat) but not fiat directly. In this world, the Libra Association controls much of the demand for fiat via the composition of their reserves.
Imagine that most people use Libra (backed by fiat) but not fiat directly. In this world, the Libra Association controls much of the demand for fiat via the composition of their reserves.
The Association can, at any time, change the composition of their reserve by replacing one fiat with another, while maintaining full reserve at all times. If you control the demand for an asset, you gain the power to set a ceiling on it's price.
This power to change the Libra's reserve composition becomes an important geopolitical lever over nation-states and thus over local laws and regulations. The LA would be a kingmaker.
