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On April 2nd, Dallas Federal Reserve President Logan outlined the path and options for the Fed to reduce its balance sheet, noting that the current system functions well and benefits overall financial stability. Logan stated that the Feds current system for managing financial liquidity is designed to provide "ample" levels of reserves, and that the system is "efficient and effective." However, there are several ways to help reduce the Feds holdings under the current system, many of which involve rules governing financial institutions management of cash reserves. Recent internal and external research by the Fed indicates that by adjusting regulations to encourage banks to hold lower reserve levels, the Fed could further reduce its balance sheet under the current system. Logan agreed, stating that the Fed is currently working to make reserve management "more efficient" during periods of stress. She also stated that some liquidity rules, while increasing reserves, have not improved safety because banks are reluctant to use these reserves during crises. "This is an inefficient use of the Feds balance sheet, and we can completely avoid this."Lei Jun, chairman of Xiaomi Group, announced in a live broadcast that the new generation SU7 has secured more than 40,000 orders.Federal Reserves Logan: There are many options for reducing the size of the Federal Reserves balance sheet, and they are interconnected.Federal Reserves Logan: If public demand can be met, there is no problem with the expansion of the Federal Reserves balance sheet.Federal Reserves Logan: The Fed should not let balance sheet issues distract it from its mission.

LUNA Revival，Terra Founder Do Kwon Fails to Stimulate UST

Jimmy Khan

May 12, 2022 09:47

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Terraform Labs CEO and Terra blockchain pioneer Do Kwon broke his silence on Wednesday, after a night of volatility in the UST and LUNA markets.


Markets had been expecting him to present an alleged "recovery plan" as promised in a tweet on Tuesday for over 20 hours.


Kwon speaks to the Terra residents.


"I realize the past 72 hours have been tremendously difficult for all of you," he added in a fresh Twitter thread on Wednesday, before promising the Terra community that "I am committed to work with every one of you to weather this crisis, and we will build our way out of this." Together.”


"Before $UST can start to repeg, the only road ahead will be to absorb the stablecoin supply that wants to go," he stated.


As a consequence, he said that Terraform Labs (TFL) "endorses the community proposal 1164," which would enable the Terra blockchain to absorb the UST supply more swiftly.


"Obviously, this comes at a great cost to UST and LUNA holders," he continued, "but we will continue to investigate alternative strategies to bring in additional external money to the ecosystem and minimize UST supply overhang."


Other community recommendations, he added, will be examined as well.


Kwon went on to say that once UST is rebuilt, the collateralization method would be tweaked, and he ended his post by trying to calm down the Terra community.


"With hundreds of dedicated teams producing category-defining apps inside the Terra ecosystem, it is one of the most vibrant in the crypto business," he added. "We will emerge out of this together as long as these builders, including TFL, keep building."

The UST and LUNA Markets Were Unimpressed.

The price of Terra's flagship algorithmic stablecoin UST has not recovered as a result of Kwon's "recovery plan." As the start of the US trading day approaches, it continues to trade at low levels in the $0.30 range.


Meanwhile, the influx of UST supply, which is then turned into LUNA supply thanks to Terra's mint-burn process, continues to weigh hard on the token. It just dropped below $2.0 for the first time since February 2021.


LUNA/USD has lost almost 97 percent of its value since the beginning of the week, when it was trading at $65 per token, and is down over 98 percent from its all-time high near $120 at the beginning of the month.


The selling pressure on LUNA is unlikely to diminish as long as there remains a backlog of UST to be converted into LUNA (where it will almost certainly be sold soon after conversion).


With UST trading so much below its peg, many UST holders will have no choice but to use Terra's mint-burn mechanism to convert their UST into the same USD amount of LUNA and then sell it immediately.

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