In a report published on June 22, economists from the United States Federal Reserve have said that earlier iterations of Facebook’s Libra currency had induced an overreaction from lawmakers and that the worries were “overstated.”

Garth Baughman and Jean Flemming, who authored the report, said that they found four major results when numerically simulating global stablecoins like Libra to see what effect it would have on the global economy.

First, the overall demand for such a currency would be small because of “general equilibrium effects of the basket currency on the volatility of currency values.” It also makes a tentatively positive remark on the idea of a global stablecoin, stating as its second conclusion that global reach may contribute to substantial increases in welfare if the basket is widely accepted, allowing it to complement holdings of sovereign currencies.

The final two conclusions speak of the potential of a single-basket stablecoins and its impact on sovereign currencies. The economists state that it is unlikely to replace national currencies as global stablecoins. This would depend on international acceptance and high demand from buyers, which does not appear likely enough to warrant concern.

As a final statement, the report says that in order to achieve widespread adoption of basket-backed stablecoins, “there must be significant benefits in addition to what is already being offered.”

Facebook was compelled to change the design philosophy of its Libra asset after a backlash from governments across the world. The new design takes into account a basket of single currency stablecoins, including the US Dollar, British Pound and Euro, to support the stablecoin asset.