Bitcoin’s wild ride; Wells names three directors

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Bitcoin madness: Two more Wall Street firms have succumbed to the bitcoin bug. Nasdaq said it plans to introduce bitcoin futures in the first half of 2018, while Cantor Fitzgerald said it is looking at launching bitcoin derivatives on an exchange it owns.

Ironically, the announcements came on one of the most volatile trading days for the digital currency ever. The price plunged 18% Wednesday afternoon to below $9,500 after blowing through both $10,000 and $11,000 for the first time earlier in the day. The price of bitcoin is up more than 900% this year, from less than $1,000, and 21% just since last Friday. Wall Street Journal here and here, Financial Times, Washington Post, American Banker here and here

Several bitcoin exchanges were overwhelmed by the heavy trading volume, which exceeded 400,000 transactions.

What is bitcoin, actually? It’s not what you think, the Journal explains.

Even the Fed is looking at bitcoin. William Dudley, the president of the Federal Reserve Bank of New York, told an audience at Rutgers University in New Jersey the Fed is beginning to look into whether it could adopt its own digital currency. He said bitcoin is “really more of a speculative activity” and doesn’t meet the test of being a currency, but that the technology behind the cybercurrency is worth exploring.

Naming names: President Trump nominated Marvin Goodfriend a former Fed economist and a professor at Carnegie Mellon University, to a seat on the Fed’s board of governors. Goodfriend, “a widely respected monetary economist, would provide academic heft on a board that now has just two economists,” the Journal says. Wall Street Journal, Financial Times, American Banker

Trump also plans to nominate Thomas E. Workman, the longtime president of the Life Insurance Council of New York, to the Financial Stability Oversight Council.

Australian probe: Australian Prime Minister Malcolm Turnbull announced a government inquiry into misconduct at the country’s banks and financial system after the four biggest lenders ended a multi-million-dollar lobbying campaign against the idea. The action follows a string of scandals at the banks, including alleged money laundering at Commonwealth Bank of Australia, the country’s biggest bank. Shares in the country’s four biggest banks fell on the news. Wall Street Journal, Financial Times

Wall Street Journal
Don’t hold your breath: Germany’s economy may be a model of strength and discipline, but its banking system sure isn’t, says theHeard on the Street column. “German banking consistently produces some of the weakest returns [in the euro zone] and is most in need of consolidation,” it says. “But investors hoping for better profitability shouldn’t hold their breath.”

The structure of the industry “leaves the odds stacked against major reform,” it explains. The country’s banking system “is among the most fragmented, least efficient and poorly performing in the eurozone — and it is blighted with about €60 billion of bad loans mainly from the stricken shipping industry.”

Financial Times
New direction?: Wells Fargo named three new directors as it deals with a seemingly endless line of scandals and regulatory challenges. The bank named Theodore Craver, former chief of utility Edison International; Maria Morris, former interim head at MetLife; and Celeste Clark, a former Kellogg executive. They will replace three outgoing directors, including former chairman Stephen Sanger.

Quotable
“It’s premature to be talking about the Federal Reserve offering digital currencies, but it is something we are starting to think about.” — Federal Reserve Bank of New York President William Dudley.