Researchers at the Federal Reserve Bank of Dallas said tokenized deposits and round-the-clock instant transfers on blockchain networks could weaken bank liquidity and limit banks’ ability to make long-term loans. The study was written by Rosie Levy and Srini Ramaswamy. According to their findings, about 80% of the $7 trillion in maturity risk carried by U.S. banks is supported by the maturity characteristics of traditional deposits. The researchers estimated that if the weighted average maturity of deposits were shortened by 10%, the banking system’s maturity transformation capacity would fall by about $580 billion, while liquidity risk and funding outflow pressure could rise. Kula co-founder Chris Turner added that the speed of token transfers does not mean the underlying financial claim has reached legal settlement. He said tokens may move across blockchain networks within seconds, but payment, ownership and legal claims still rely on banks, custodians, clearing systems and regulatory registries to complete settlement.
Researchers at the Federal Reserve Bank of Dallas said tokenized deposits and 24/7 instant blockchain transfers could weaken bank liquidity and limit banks’ capacity to extend long-term loans.
The study was written by Rosie Levy and Srini Ramaswamy. It said about 80% of the $7 trillion in maturity risk borne by U.S. banks is supported by the maturity profile of traditional deposits.
The researchers estimated that if the weighted average maturity of deposits shortened by 10%, the banking system’s maturity transformation capacity would decline by about $580 billion. The study also said that could increase liquidity risk and pressure from funding outflows.
Kula co-founder Chris Turner said the speed of token transfers does not mean the underlying financial claim has reached legal settlement. Tokens can move across blockchain networks within seconds, he said, but payment, ownership and legal claims still depend on banks, custodians, clearing systems and regulatory registries to complete settlement.
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