A report by the Dallas Federal Reserve, published on Tuesday, warns of the risks linked to tokenized deposits for the banking system’s stability. According to the study, a 10% increase in deposit-rate sensitivity could reduce banks’ capacity to manage interest-rate risk by approximately $700 billion in 10-year-equivalent terms. Tokenized deposits, which enable instant settlement and automated transfers via smart contracts, would make it easier for customers to chase higher yields, eroding deposit stability. This shift could also reduce the banking system’s maturity-transformation capacity by an additional $580 billion, according to the authors’ calculations.
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