Tokenized deposits could make bank funds less stable and raise the cost of credit for U.S. households and businesses, according to an analysis by two economists at the Federal Reserve Bank of Dallas.
Economists Rosie Levy and Srini Ramaswamy said Instant settlement may allow depositors to switch banks more quickly. They said programmable deposit tokens and agentic artificial intelligence could automate transfers, shortening deposit times at individual banks and making them more sensitive to interest rates.
Economists estimate that if deposits become 10% more sensitive to interest rates, banks’ ability to hold long-term loans and other assets could be reduced by about $700 billion. In a separate scenario, 10% less deposits in banks could reduce that capacity by about $580 billion. Both figures are expressed in 10-year equivalents and do not represent a direct reduction in lending.
The calculations represent scenarios rather than forecasts and do not represent dollar-for-dollar reductions in bank loans. US banks build shared blockchain networks designed to transfer tokenized deposits around the clock while keeping customer funds within the regulated banking system.
Banks build networks for tokenized deposits
On Tuesday, thirty-nine US state banking associations formed the BankChain Alliance to create a nationwide network supporting tokenized deposits, stablecoins and automated settlements. The clearing house is building a separate network backed by JPMorgan Chase, Bank of America, Citi, BNY and Wells Fargo.
Banks are also beginning to integrate tokenized-deposit systems across institutions. On August 20, Standard Chartered and HSBC completed a live cross-border transaction via Swift’s blockchain ledger, which linked the banks’ separate systems and recorded their liabilities before settlement through existing payment infrastructure.
Related: US Regulators Discuss Guidelines for Tokenized Deposit Insurance, Stablecoins
Levy and Ramaswamy say banks can respond to more volatile deposits by holding larger portfolios of highly liquid assets, including reserves and US Treasuries. They said banks could rely more on term loans to maintain their lending portfolios, although debt funding through wholesale lending would likely raise the cost of credit for consumers and businesses.
The authors cite Brazil’s Pix instant-payment system as a possible comparison, noting that it is not identical to tokenized deposits. A 2025 study found The use of heavy picks increases the bank’s holdings of liquid assets and reduces credit intermediation.
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