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Tokenized deposits could make US bank funding more sensitive to rates
Dallas Fed economists estimated that greater rate sensitivity in deposits could reduce banks’ capacity to hold long-term assets by about $700 billion in 10-year equivalents, depending on how long deposits stay put.
Faster, programmable tokenized deposits could make US bank funding less stable and lift credit costs for households and businesses, according to an analysis by two Federal Reserve Bank of Dallas economists reported by Cointelegraph.
The economists, Rosie Levy and Srini Ramaswamy, argued that instant settlement could let depositors move quickly to higher-yield options, and that programmable deposit tokens combined with agentic artificial intelligence could automate transfers and increase deposits’ sensitivity to interest rates.
In scenario analysis, they estimated that if deposits became 10% more sensitive to interest rates, banks’ capacity to hold long-term loans and other assets could fall by about $700 billion in 10-year equivalents. In a separate case where deposits stayed at banks for 10% less time, capacity could decline by about $580 billion, and the outlet noted the figures are scenarios, not forecasts or dollar-for-dollar lending reductions.
The analysis comes as US banks build blockchain networks aimed at moving tokenized deposits around the clock while keeping customer funds within the regulated banking system, Cointelegraph said. It cited the Aug. 27 formation of the BankChain Alliance by 39 US state banking associations, and separate efforts by The Clearing House backed by major banks including JPMorgan Chase, Bank of America, Citi, BNY, and Wells Fargo, plus an Aug. 20 live cross-border transaction between Standard Chartered and HSBC using Swift’s blockchain ledger.