Libra or Librae? Basket based stablecoins to mitigate foreign exchange volatility spillovers

The paper aims to assess, from an empirical viewpoint, the advantages of a stablecoin whose value is derived basket underlying currencies, against which pegged one major currency, such as dollar. To this aim, we first find optimal weights currencies that can comprise our basket. We then employ volatility spillover decomposition methods understand foreign currency mostly drives others. look at how stability either affected by shocks means networks built on VAR models. Our findings show based less volatile than all single currencies. This result fundamental for policy making, and especially emerging markets with high level remittances: Librae (basket stablecoin) preserve their during turbolent times better Libra (single stablecoin).