coindesk.com
Tokenized deposits could reduce U.S. banks’ capacity to hold long-term interest-rate risk by about $700 billion if they make depositors 10% more sensitive to rates.
That’s according to estimates from two Dallas Fed economists. A separate scenario found that if tokenization causes deposits to leave banks 10% sooner, banks could lose about $580 billion of capacity to absorb the interest-rate risk of long-term loans and securities, the economists estimated.
The calculations assume deposits remain at a bank for an average of four years. That makes the products banks are developing as regulated alternatives to stablecoins a potential constraint on their ability to fund long-term loans.
The figures measure how much long-term interest-rate exposure banks could support if tokenization makes deposits easier to move and less reliable as a source of funding for loans.
Rosie Levy and Srini Ramaswamy, the economists, estimated that “other deposits,” excluding large time deposits, support about $5.8 trillion, or 80%, of the banking system’s roughly $7 trillion in long-term interest-rate exposure.
“Instant settlement would allow deposit holders who prioritize yield to switch banks almost instantaneously,” Levy and Ramaswamy wrote.
Tokenized deposits place commercial-bank money on a blockchain, enabling programmable payments and real-time settlement while keeping funds inside the regulated banking system. However, these features could weaken the frictions that make deposits sticky.
Depositors seeking higher yields could move money between banks almost instantaneously. Smart contracts and agentic AI could theoretically automate that process, switching deposits without requiring the holder to take any direct action, the economists added.
Banks could respond by paying higher rates to retain deposits, holding more reserves and Treasuries or relying more heavily on term debt.
If they used that more expensive debt to maintain their existing lending, it would likely “adversely impact the cost of credit for consumers and businesses,” the economists wrote.
Evidence from Brazil offers an early comparison. A 2025 study of the country’s instant payment network Pix found that heavier usage of the system increased banks’ holdings of liquid assets, particularly government bonds, while reducing credit intermediation.
Banks also increased the share of subprime loans in their remaining loan books as they sought higher returns.
Tokenized deposits remain at an early stage and are generally difficult to transfer between issuers. The Clearing House and banks including Bank of America, Citi and Wells Fargo are developing an interoperable network designed to support cross-bank clearing, automated workflows and 24/7 settlement.