Economists Rosie Levy and Srini Ramaswamy at the Federal Reserve Bank of Dallas estimate that tokenized deposits could materially reduce how much long-term interest rate risk US banks can bear under two stress assumptions. In their estimate, a 10% increase in depositor sensitivity to interest rates could reduce that capacity by about $700 billion. If tokenization were to trigger a 10% early outflow of deposits, banks would lose roughly $580 billion of risk absorption capacity.
The analysis describes tokenized deposits as commercial bank money placed on blockchain rails, enabling programmable payments and real-time settlement. At the same time, the economists say smart contracts and AI agents could automate deposit shifts, cutting into deposit stickiness. They add that banks could respond by raising deposit rates, holding more reserves and Treasuries, or relying more on term debt, though those adjustments may increase borrowing costs for households and businesses. The piece also points to research on Brazil’s Pix instant payment network, which found that more frequent use was associated with higher bank holdings of liquid assets such as government bonds and less credit intermediation. Tokenized deposits remain at an early stage, with The Clearing House, Bank of America, Citigroup, and Wells Fargo among those developing interoperable networks for interbank clearing, automated workflows, and 24/7 settlement.
Economists Rosie Levy and Srini Ramaswamy at the Federal Reserve Bank of Dallas estimate that if depositor sensitivity to interest rates rises by 10%, tokenized deposits could reduce US banks’ capacity to bear long-term interest rate risk by about $700 billion. If tokenization leads to a 10% early outflow of deposits, banks would lose roughly $580 billion of risk absorption capacity.
Payment efficiency gains come with questions about deposit stability
The analysis describes tokenized deposits as commercial bank money placed on blockchain infrastructure, allowing programmable payments and real-time settlement. It also says smart contracts and AI agents may automate deposit transfers, which could weaken deposit stickiness.
Banks could respond by reshaping funding and liquidity
According to the economists, banks could adapt by offering higher deposit rates, increasing reserves and Treasury holdings, or relying more heavily on term debt. Those adjustments, however, may raise credit costs for consumers and businesses.
Brazil’s Pix offers a reference point
Research on Brazil’s instant payment network Pix found that more frequent use of the system increased banks’ holdings of liquid assets such as government bonds, while reducing credit intermediation.
Development remains at an early stage
Tokenized deposits are still in an early phase. The Clearing House, along with Bank of America, Citigroup, and Wells Fargo, is developing interoperable networks designed to support interbank clearing, automated workflows, and 24/7 settlement.
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