Dallas Fed study: tokenized deposits or reduced bank stability

THE DALLAS FEDERAL RESERVE STUDY NOTED THAT, WHILE MONETIZED DEPOSITS CAN IMPROVE PAYMENT AND SETTLEMENT EFFICIENCY, INSTANT SETTLEMENTS, SMART CONTRACTS AND AI AGENTS MAY ALSO MAKE IT EASIER FOR DEPOSITORS TO PURSUE HIGHER RETURNS BETWEEN DIFFERENT BANKS, REDUCE DEPOSIT STABILITY AND REDUCE THE ABILITY OF BANKS TO USE SHORT-TERM DEPOSITS TO SUPPORT LONG-TERM LOANS. THE STUDY ESTIMATES THAT IF DEPOSITS BECOME MORE SENSITIVE TO CHANGES IN INTEREST RATES BY 10 PER CENT, THE ABILITY OF THE BANKING SYSTEM TO ASSUME INTEREST RATE RISK WILL BE REDUCED BY ABOUT $700 BILLION, AND IF THE WEIGHTED AVERAGE DURATION OF DEPOSITS IS REDUCED BY 10 PER CENT, THE CAPACITY OF THE BANKING SYSTEM TO CONVERT BY ABOUT $580 BILLION. IF BANKS WISH TO MAINTAIN THE EXISTING LENDING STRUCTURE, THEY MAY NEED TO RELY MORE ON MORE COSTLY LONG-TERM DEBT FINANCING, THUS INCREASING THE COST OF CREDIT FOR BOTH BUSINESSES AND CONSUMERS。