Finance

A trader works on the trading floor of the New York Stock Exchange in New York, Nov. 30, 2021.
Michael Nagle | Xinhua News Agency | Getty Images

Stock futures were lower in overnight trading Thursday ahead of the November jobs report as the market nears the end of a roller-coaster week driven by Covid omicron variant developments.
Futures on the Dow Jones Industrial Average shed about 90 points. S&P 500 futures dipped 0.3% and Nasdaq 100 futures edged 0.3% lower.

The November jobs report is set for release Friday morning. Investors expect to see solid jobs growth last month, with economists surveyed by Dow Jones predicting 581,000 jobs added in November.
The three major indexes rebounded in Thursday’s regular trading session. The Dow gained 617 points. The S&P 500 rose 1.4% and the Nasdaq Composite gained 0.8%.
Cyclical names tied to the economic recovery made back some of their recent losses. Industrials led the S&P 500 sectors Thursday with a 2.89% gain.
“We view the recent selloff in these segments as an opportunity to buy the dip in cyclicals, commodities and reopening themes,” Marko Kolanovic, JPMorgan chief global markets strategist, said in a note Wednesday.
On the data front, initial jobless claims totaled 222,000 for the week ended Nov. 27, lower than economists expected.

Despite Thursday’s rally, the averages are on pace for a losing week. The Dow and the Nasdaq Composite are each about 0.7% lower on the week, while the S&P 500 is down 0.4%.

“With rising cases of the virus, a less accommodative Fed, and tougher growth comps in the year ahead, the uncertainties around the outlook may simply be building — resulting in a more volatile environment for price discovery,” Goldman Sachs’ Chris Hussey said in a note.

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Florida, Port St Lucie, The Landing at Tradition, outdoor mall, Ulta, beauty cosmetics store.
Jeff Greenberg | Universal Images Group | Getty Images

Check out the companies making headlines after the bell: 
Marvell Technology — Shares of Marvell Technology surged more than 11% in extended trading after the semiconductor company posted better-than-expected quarterly results. Marvell posted earnings of 43 cents per share on revenue of $1.21 billion. Analysts expected a profit of 39 cents per share on $1.15 billion in revenue, according to Refinitiv.

Ulta Beauty — Ulta Beauty shares gained more than 3% in after-hours trading following an earnings beat. The beauty store chain posted earnings of $3.93, crushing the Refinitv consensus estimate of $2.46. Revenue also came in higher than expected.
DocuSign — Shares of DocuSign plunged more than 25% during extended trading after issuing weak fourth-quarter guidance. DocuSign projected fourth-quarter revenue between $557 million to $563 million, while analysts expected revenue of $573.8 million, according to Refinitiv.
Ollie’s Bargain Outlet — Shares of Ollie’s Bargain Outlet dropped roughly 18% after the company’s quarterly results missed Wall Street expectations. Ollie’s reported earnings of 34 cents per share on revenue of $383 million, while analysts surveyed by Refinitiv expected 47 cents earned per share on revenue of $415 million.
Asana — Asana shares sunk 13% during extended trading despite beating expectations for the third quarter. The work management platform posted a loss of 23 cents per share adj., while analysts expected a loss of 27 cents per share, according to StreetAccount.

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A shopper holding an umbrella walks towards a Kroger Co. grocery store in Louisville, Kentucky, U.S., on Sunday, April 26, 2020.
Stacie Scott | Bloomberg | Getty Images

Check out the companies making headlines in midday trading Thursday.
Kroger — Shares of Kroger ran up 11% after the grocery chain posted a better-than-expected quarterly report. The company reported earnings of 78 cents per share on revenue of $31.86 billion. Analysts expected a profit of 66 cents per share on revenue of $31.23 billion, according to Refinitiv.

Snowflake — The software stock popped 15.9% following a stronger than expected third-quarter report. Snowflake said it generated $334.4 million in revenue during the third quarter, up 110% year over year and above the Refinitiv forecast of $305.6 million. The company’s product revenue guidance for the fourth quarter and 2022 also topped expectations, according to FactSet.
Boeing — Shares of the aircraft maker jumped 7.5% after China’s aviation regulator cleared the Boeing 737 Max to return to flying Thursday. That model had been grounded worldwide for more than two years following two fatal crashes.
Signet Jewelers — Signet Jewelers saw its shares sink 29.7% even after a better-than-expected earnings report. The company notched a profit of $1.43 per share, 71 cents higher than the Refinitiv consensus estimate. However, some analysts worried Signet’s growth was unsustainable going into next year.
Apple — Shares of Apple dipped 0.6% after Bloomberg reported that the company told some of its suppliers there could be slowing demand for iPhone 13 models. It previously expected the reduction in its initial production goal to be made up in 2022 but said that may not materialize now.
Five Below — The retail stock gained 5% after a better-than-expected quarterly earnings and sales report. Five Below also reported a 14.8% increase in comparable-store sales, smashing the Refinitiv consensus estimate of 5.3%.

Okta — Shares of Okta added 11.7% after the identity and access management company posted quarterly results. Okta lost 7 cents per share, narrower than the 24 cents per share loss estimated by analysts, according to Refinitiv. The company also issued fourth-quarter guidance above estimates.
Lands’ End — Lands’ End shares sunk 9.9% on the back of lower-than-expected third-quarter revenue. The retailer posted revenue of $375.8 million versus a StreetAccount estimate of $398 million. Lands’ End also issued fourth-quarter earnings and revenue guidance below estimates.
Dollar General — Dollar General shares fell 3.1% despite the company reporting better-than-expected earnings and revenue for the third quarter. However, Dollar General said it anticipates same-store sales will decline this fiscal year. The company also revealed plans to open 1,000 Popshelf stores, aimed at wealthier suburban shoppers, by the end of the 2025 fiscal year.
Simon Property Group — Shares of mall owner rose 2.8% after Morgan Stanley reiterated its overweight rating on the stock. The firm said investors should buy the recent dip in Simon and that the company could hike its dividend again soon.
Ford Motor — Shares of the automaker rose 1.5% after the company said its F-Series pickup will remain America’s best-selling vehicle for a 40th straight year and the industry’s top-selling truck for the 45th consecutive year. The rally came even after Wall Street firm Wolfe Research downgraded the stock to peer perform from outperform. Wolfe said Ford’s pivot to clean-energy vehicles has gone far enough and said the stock’s rally will slow in 2022. Ford shares have climbed 127% year to date.
Uber — Shares of Uber added 5.8% after UBS initiated coverage of the ride-sharing stock with a buy rating. The firm said it likes Uber’s improving mobility and profitability.
PVH — The Tommy Hilfiger-parent company saw its shares fall 4.1% after reporting lower-than-expected quarterly sales. PVH posted $2.33 billion in quarterly revenue, while analysts expected revenue of $2.41 billion, according to Refinitv.
— CNBC’s Jesse Pound, Tanaya Macheel and Yun Li contributed reporting.

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The federal government has issued $872 billion in pandemic unemployment benefits as of Sept. 30. At least 10% was likely paid improperly, largely due to fraud, according to a U.S. Department of Labor report released Monday.
Unprecedented funding from Congress led organized crime rings and other thieves to target the unemployment system.
High fraud levels butted up against lawmakers’ desire to issue aid quickly during the Covid-era recession. The funds also kept millions out of poverty.

Mike Stocker/South Florida Sun Sentinel/Tribune News Service via Getty Images

More than $87 billion in unemployment benefits funded by the federal government was likely siphoned from the system during the Covid-19 pandemic, much of it due to fraud, according to a U.S. Department of Labor report.
Congress authorized many new programs in the pandemic’s early days to support millions of workers who’d lost their jobs. Those programs, which ended on Labor Day this year, raised weekly benefits, extended the duration of aid and expanded the pool of jobless Americans eligible for payments.

The federal government issued $872 billion in total benefits as of Sept. 30, according to an estimate from the Labor Department’s Office of Inspector General, which released a semiannual report for Congress on Monday.

However, the “unprecedented” level of funding led to a surge in theft and fraud, according to the watchdog, which audits Labor Department programs and operations.
It estimates 10% or more (at least $87 billion) of the federal money was likely lost to “improper payments,” with a “significant portion attributable to fraud.”
(States, which administer benefits, may have issued some payments in error for reasons unrelated to fraud, such as processing errors or application mistakes from claimants.)
More from Personal Finance:Control of Senate may depend on fate of paid family leave legislationFinancial watchdog cracks down on bank overdraft feesMore employers to require Covid vaccines as omicron fears grow

Much of the criminal activity was focused on one temporary program, Pandemic Unemployment Assistance, which expanded aid to the self-employed, gig workers and others who don’t typically qualify for state unemployment insurance, according to labor experts.
Lawmakers initially let program applicants self-attest their qualification for benefits. (This isn’t true of traditional state benefits, which become available after a more thorough verification.)
The move helped expedite aid to ailing households during the deepest recession since the Great Depression; but the laxer requirements, coupled with a $600 weekly increase in benefits, led thieves to try exploiting the system.

Much of the unemployment fraud has been linked to organized crime rings that bought identity information stolen in past data breaches, the Labor Department has said. Criminals use this data to apply for benefits in others’ names.
“I think the problem with unemployment fraud was serious and unprecedented, and I don’t think the states were ready for how stolen identities could be used to take advantage of these programs,” said Andrew Stettner, a senior fellow and unemployment expert at The Century Foundation, a progressive think tank.

“[However] states didn’t have much time to build them out with the right protections,” Stettner said of the temporary federal programs. “And having a more permanent system would certainly help.”
While the high level of fraud is problematic, it doesn’t diminish the overall success of the pandemic-era programs, which cut poverty and led to a speedy economic recovery, Stettner said. Expanded unemployment benefits prevented 5.5 million people from falling into poverty in 2020, according to the U.S. Census Bureau.
Investigative work involving unemployment benefits increased by 1,000 times more than the usual amount during the pandemic, according to the Inspector General report. Such work now accounts for 92% of the watchdog’s investigative case inventory, up from 12% prior to the pandemic.

Lawmakers and states have cracked down to try limiting theft.
For example, Congress passed a relief law in December 2020 that tightened some of the documentation requirements to collect pandemic benefits. Many states implemented identity verification measures. The Labor Department is also providing up to $240 million to states to help prevent and fight fraud in both the traditional and pandemic-era unemployment programs.
However, some safeguards have ensnared legitimate claimants and delayed aid.

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GREAT FLOODS are supposed to wash away the world’s ills. Facing a divine deluge, Noah built an ark in which to escape. In “Metamorphoses” Ovid, a Roman poet, describes how Jove, king of the gods, unleashes a flood to wipe out a degenerate humanity: “now seas and Earth were in confusion, lost; a world of waters, and without a coast.”Whether a flood has wiped out the unworthy is a critical question for investors in special purpose acquisition companies (SPACs). These are blank-cheque vehicles that raise capital through initial public offerings, after which their sponsors hunt for private firms to take public via mergers. Although SPACs have been around for decades, they were once niche affairs. Their structure was costly for investors, and companies mostly avoided them.Their popularity surged in 2020. Between June 2020 and November 2021 more than 700 SPACs were created, almost eight times as many as in the preceding 16 months. SPACs have raised $235bn since the start of 2020, a staggering $97bn of it in the first quarter of 2021 alone. Everyone who’s anyone has sponsored a SPAC, from Shaquille O’Neal, a former basketball player, and Serena Williams, a tennis player, to Gary Cohn, a former banker at Goldman Sachs, and Bob Diamond, erstwhile boss of Barclays. Because they are listed pots of cash, shares in pre-merger SPACs tend to trade near their IPO price, usually $10. But prices climbed late last year, peaking at a premium of 15% this spring.The hysteria ended in April after regulators began to grumble. Prices of pre-merger SPACs tumbled and the pace of SPAC creation slowed. Mr Diamond posits that this helped clear out the muck. “Oh my goodness, has there been a washout. The days of the celebrity SPAC are gone,” he says. The next phase, he argues, will be about sponsors who have proven track records and who can attract extra capital from institutional investors keen to gain exposure to newly listed firms. The idea that SPACs have been cleaned up is widely held. But do the data support it?The phase immediately preceding the frenzy seems to have proved a poor bet for investors. In October 2020 Michael Klausner and Emily Ruan of Stanford and Michael Ohlrogge of New York University published a draft paper evaluating investors’ returns. For SPACs that merged between January 2019 and June 2020, these were dismal. The problems were structural. Investors who buy a SPAC’s shares during its IPO are often given free “warrants”, the right to buy more stock in the future. Around 5.5% of investors’ money is eaten up in underwriting fees. Punters can claim their stake back at any time, but that leaves the costs to be borne by the rest. And when a deal is struck, the sponsor typically takes 20% of the shares issued. From every $10 raised, a median of only $5.70 was available for the merged entity to spend.As sponsors are only paid if they arrange a merger, their incentive is to do a deal, even at a high price. The fatter the slice taken by sponsors and early investors, the worse the stock performance of the merged company. Firms that went public via a SPAC between January 2019 and June 2020 underperformed the Nasdaq composite, an index of American stocks, by 64.1 percentage points in the period to November 1st 2021.The paper caused much consternation among SPAC fans. “We have received countless responses to our research,” the authors noted in a postscript published online on November 15th. “Most of which amounted to ‘your study is out of date’.” So they reran their analysis.The authors found that there were indeed some differences between the original cohort and SPACs created in the six months after September 2020. The second group experienced far fewer redemptions, tended to issue fewer warrants and attracted more capital from institutional investors. As a result, cash available for merged firms rose to $6.60, per each $10 share. Still, SPACs that closed deals in the six months from October 2020 have underperformed the Nasdaq by around 20 percentage points: an improvement, but hardly stellar.Crucially, there is little evidence of lasting change. “It’s remarkable how little innovation in structure there’s been,” says Mr Klausner. Sponsor shares, warrants and underwriting fees are still present in much the same form. Redemptions and warrants offered are on the up again, and institutional investment has begun to fall. The havoc of 2021 has not wiped away all of SPACs’ ills. If anything, it has left a lot of muck behind.For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “After the flood” More

A WAVE OF passive capital flows is the handsome prize for countries that secure a place in major bond indices. That prospect seems to be on the horizon for India. Many analysts expect part of its government-bond market to enter indices compiled by Bloomberg, a data provider, and JPMorgan Chase, a bank, as early as next year, or perhaps 2023. The government has been keen on inclusion even as it has been ambivalent about other types of capital flows. Its cautious approach is increasingly in line with economists’ shifting attitudes.The flows that inclusion in major bond indices tend to generate are one of the least objectionable forms of international investment. They tend to come from massive, slow-moving funds—the opposite of the flighty hot-money flows that emerging-market policymakers fear. That might be why index inclusion has been a priority for India’s finance ministry. Until last year a cap of 6% on the foreign ownership of government bonds had been the main factor preventing India’s inclusion in the big bond indices. Then officials introduced a “fully accessible route” for overseas investors, which lifts the foreign-ownership limit on some bonds.Analysis by big investment banks suggests that re-weighting by global investors would prompt flows of $30bn-40bn into India’s bond market. That would exceed the current stock of foreign investors’ holdings, which amounts to a mere 2% of the more than $1trn in outstanding Indian government securities. Reliable and regular inflows of foreign capital could help suppress public-borrowing costs. Corporate borrowers could also benefit from lower benchmark rates. And the rupee would be bolstered, according to analysts at Morgan Stanley, a bank.The hope for India, and many other emerging-market governments, would be to mimic China’s experience. Foreign ownership of its central-government bonds has more than doubled from 4.5% to 10.6% in the past four years, without any noticeable hiccups, and without jeopardising China’s broader capital controls. But other countries’ experiences show just how unusually benign that is.India’s own recent relationship with portfolio-investment flows explains the government’s hesitation in opening up fully (ownership caps will remain on other bonds and assets). Sizeable outflows from foreign-bond investors occurred in 2013, 2016 and 2018, all driven by expectations of tighter policy from the Federal Reserve. The 2013 sell-off in particular was combined with a sharp drop in the rupee. Foreign bondholders likewise rushed for the door at the onset of the pandemic last year.Even the IMF, once a stalwart opponent of capital controls, is more equivocal these days. Last year the fund’s Independent Evaluation Office noted that the views of India’s authorities and the IMF on capital controls had become more aligned (although the fund is still happier with allowing large exchange-rate movements in response to external shocks than is the typical Indian policymaker).Nor is the capital that comes with index inclusion entirely stable. Although inflows triggered by inclusion are far less sensitive to the domestic economic environment, they are between three and five times more sensitive to global financial conditions, suggests IMF research published last year. Investors often trim their allocations to riskier emerging markets and retreat to safer assets like cash and American Treasuries during times of market stress. The fact that Indonesia was part of indices constructed by Bloomberg and JPMorgan, for instance, did not stop foreigners selling off its government bonds in the panic of spring 2020. Foreign ownership of the country’s bonds had declined to 21% in October this year, from 39% in December 2019. Research by the Asian Development Bank also finds that foreign ownership of local-currency bonds can increase the volatility of capital flows, particularly in the least developed markets.Still, international institutions are hardly advocating stopping inflows altogether. In a report earlier this year the Bank for International Settlements, a club of central bankers, argued that deep and liquid financial markets, prudent monetary and fiscal policy and strong company balance-sheets could act as buffers against the sometimes volatile ebb and flow of capital. If India is to realise the full benefits of inclusion, it will have to heed that counsel. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “Over flows” More

IN JUNE THE IMF made the latest of many calls from economists for a market-oriented policy to tackle climate change. “Carbon pricing…is the least-cost option to deliver deep emission cuts,” it argued in a paper written ahead of a meeting of the leaders of the G20 group of large economies. Carbon taxes, as this newspaper has long argued, can be a powerful way to force polluters to pay for the harm they do to the environment by burning fossil fuels.With the political will for a global tax lacking, many places are going it alone. The World Bank reckons that 45 countries and 34 subnational jurisdictions have adopted some form of carbon pricing, ranging from taxes to emissions-trading systems. But these schemes cover only about a fifth of global greenhouse-gas emissions. New research shows that such piecemeal progress can have unintended consequences.A recent paper by Luc Laeven and Alexander Popov of the European Central Bank, published by the Centre for Economic Policy Research (CEPR), analyses data on more than 2m loan tranches involving banks doing cross-border lending between 1988 and 2021, during which time many countries imposed carbon pricing. The authors find that carbon taxes at home led banks to reduce lending to coal, oil and gas companies domestically, but also had the perverse consequence of causing them to increase such lending abroad. The effect, they write, is “immediate” and “economically meaningful”. The shift was most pronounced for banks with big fossil-fuel-lending portfolios, and loans were most likely to be directed towards countries lacking a carbon tax.This conclusion comes on the heels of a related CEPR paper which found that banks increase cross-border lending in response to stricter climate policies at home, with the effect more evident for banks with previous experience of international lending. Steven Ongena of the University of Zurich, one of its authors, argues that banks “use cross-border lending as a regulatory-arbitrage tool” by shifting dirty loans to countries with laxer climate policies.The findings suggest that cracking down on carbon is a bit like squeezing a balloon. Press too hard all at once and it may pop, but squeeze only in one corner and the air will simply flow to where there is less pressure. Such effects also mirror concerns about leakages in industrial markets. The EU’s carbon-pricing scheme used to grant exemptions to heavy emitters, for fear that they would otherwise move production abroad. Now, as the EU looks to close those loopholes, it is considering a carbon border-adjustment mechanism to level the playing-field.Yet domestic carbon pricing is still a policy worth pursuing, says Tara Laan of the International Institute for Sustainable Development, a think-tank. Messrs Laeven and Popov conclude that, even after accounting for their efforts to shift dirty lending overseas, carbon taxes do somewhat reduce net fossil-fuel lending by the banks studied, because they lower domestic lending by more. Uday Varadarajan of RMI, another think-tank, agrees, but points out that supplementing domestic carbon-pricing policies with measures to discourage leakage, say by urging greater transparency, could boost the impact of carbon-pricing schemes.The best solution, of course, would be worldwide adoption. The IMF suggests that high-emitting countries start by embracing a modest carbon “floor”, in order to provide a stepping stone to a global price. As the evidence of perverse consequences arising from localised pricing schemes mounts, the main task for policymakers is to orchestrate a global squeeze. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “Squeezing the balloon” More

THE FAST-MOVING frontier of financial innovation can seem an intimidating place. Concepts such as decentralisation, distributed ledgers and symmetric encryption can befuddle the outsider. Scholars and regulators may therefore have been relieved to spot parallels between the burgeoning world of stablecoins—digital tokens that are pegged to an existing currency or commodity—and America’s free-banking era of the 19th century. Indeed, recent discussions about stablecoins have sparked a lively debate around the history of privately issued money.Together the dozens of stablecoins in existence, which include Dai, Tether and USD coin, have a market capitalisation of close to $150bn. As they have exploded in value, their similarity to banks has begun to exercise regulators. Like banks, they in effect take deposits and promise immediate redemption; if many holders want to withdraw their money at the same time, and the issuer holds risky assets, then the digital coins could be in danger of collapsing. On November 30th Janet Yellen, America’s treasury secretary, said that the tokens presented “significant risks” and pressed for more regulation.Before America instituted a national currency in 1863, banks issued their own banknotes, backed by assets and redeemable for gold or silver. Critics of stablecoins often point to this period of free banking, and the example of unstable “wildcat” banks in particular, as a cautionary tale. Gary Gensler, the chairman of the Securities and Exchange Commission, America’s main markets watchdog, and Elizabeth Warren, a Democratic senator, have both compared stablecoins to wildcats, as has a recent paper by Gary Gorton of Yale University and Jeffery Zhang of the Federal Reserve. The comparison is not so clear-cut, however.The lack of a national currency before 1863 created obvious economic inefficiencies. Dollars issued by unfamiliar banks a long way from home traded at a discount, due to the lack of information about the financial health of their issuers. For the issuing bank, having notes circulate far away was an advantage, since the holders were very unlikely to turn up to redeem them. This arrangement led to the appearance of scam artists like Andrew Dexter, who bought up banks across north-eastern America and issued huge volumes of fraudulent notes. One bank was found to have issued around $580,000—around $13m in today’s money—while holding all of $86.48 in precious-metal specie. In another case in 1838, state officials in Michigan found that the boxes which should have contained the coins for which depositors could redeem their notes were bulked up with lead and broken glass.Critics argue that the comparisons with stablecoins are clear. Tether, the largest single stablecoin issuer, with $74bn in tokens in circulation, was fined $41m by the Commodity Futures Trading Commission in October for misrepresenting itself as fully backed by assets between 2016 and 2019. (Tether responded with a statement saying that “There is no finding that Tether tokens were not fully backed at all times—simply that the reserves were not all in cash and all in a bank account titled in Tether’s name, at all times,” and that it had never failed to satisfy redemption requests.)Yet there are also differences between stablecoins and the private money of antebellum America. Back then, anyone who needed banking services or currency had to place their financial fate in the hands of opaque and risky institutions. By contrast, no one in the rich world is obliged to hold stablecoins; safer alternatives, such as insured bank deposits and cash, are readily available.Nor is it clear that wildcat banks are the summation of all historical experience of privately issued money. George Selgin of the Cato Institute, a libertarian think-tank, has likened the use of wildcat banking by critics of private-money issuance to the use of Germany’s interwar hyperinflation by critics of central-bank money issuance: both are extreme and negative examples, rather than representative. Scotland’s free-banking system between 1716 and 1844, for instance, is often cited as a period of stability. Three large banks and several smaller lenders all issued currency and redeemed each other’s notes at their full value.Furthermore, at least some of the problems with American free banking may have reflected poor regulation rather than a total absence of it. Banks were often not allowed to have networks of branches and interstate banking was near-impossible, which limited the expansion of successful and trusted institutions. Many were also made to hold volatile state bonds as collateral. Slumps in the value of these could—and did—spark local banking crises.Policing the frontierHistory alone, littered as it is with both scam artists from 19th-century America and upstanding financiers from Georgian-era Scotland, cannot settle the question of how dangerous stablecoins are. But perhaps one less-appreciated lesson from American free banking is that, if innovation is not to be smothered, the quality of regulation matters. A report published by America’s President’s Working Group on Financial Markets last month recommended treating stablecoin issuers like deposit-taking institutions. Providers say that this degree of supervision is stifling. Such regulation would offer them a prize, however: accounts at the Federal Reserve, which would allow them to settle payments directly, rather than piggybacking on commercial banks.One idea, detailed by Messrs Gorton and Zhang and supported by Mr Selgin and Dan Awrey of Cornell University, would be to make reserve accounts easily available to any stablecoin provider, on the condition that they hold all their assets in such an account. That would mean that the coin is fully backed with the safest possible asset: central-bank reserves that carry no risks in terms of liquidity, maturity or credit. Scholars may be divided over whether too much or too little regulation led to the wildcats’ demise. But stablecoins could still avoid their fate. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “Taming wildcats” More