Tokenized deposits could make bank funding less stable and raise credit costs for US 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 could allow depositors seeking higher yields to switch banks more quickly. They said programmable deposit tokens and agentic artificial intelligence could automate the transfers, shortening the time that deposits remain at individual banks and making them more sensitive to interest rates.

The economists 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 a separate scenario, deposits remaining at banks for 10% less time could reduce that capacity by about $580 billion. Both figures are expressed in 10-year equivalents and do not represent direct reductions in lending. 

The calculations are scenarios rather than forecasts and do not represent dollar-for-dollar reductions in bank lending. They come as US banks build shared blockchain networks designed to move tokenized deposits around the clock while keeping customer funds within the regulated banking system.

Banks develop networks for tokenized deposits

On Tuesday, 39 US state banking associations formed the BankChain Alliance to develop a nationwide network supporting tokenized deposits, stablecoins and automated settlement. The Clearing House is developing a separate network backed by JPMorgan Chase, Bank of America, Citi, BNY and Wells Fargo. 

Banks have also begun connecting tokenized-deposit systems across institutions. On Aug. 20, Standard Chartered and HSBC completed a live cross-border transaction through Swift’s blockchain ledger, which linked the banks’ separate systems and recorded their resulting obligations before settlement through existing payment infrastructure.

Related: US regulator mulls guidance for tokenized deposit insurance, stablecoins

Levy and Ramaswamy said banks could respond to more volatile deposits by holding larger portfolios of highly liquid assets, including reserves and US Treasurys. They said banks could also rely more heavily on term debt to maintain their lending portfolios, although funding loans through wholesale debt would likely increase credit costs for consumers and businesses. 

The authors cited Brazil’s Pix instant-payment system as a potential comparison, while noting that it is not identical to tokenized deposits. A 2025 study found that heavier Pix use increased banks’ holdings of liquid assets and reduced credit intermediation.

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