Dallas Fed warns tokenized deposits may cut US bank lending by $700 billion

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The Federal Reserve Bank of Dallas has raised concerns about the potential impact of tokenized deposits on the US banking system. According to the Dallas Fed, programmable deposits combined with AI agents could allow customers to instantly and automatically shift funds to higher-yielding accounts. This automated bank-switching behavior could significantly drive up funding costs for traditional banks. The resulting financial pressure could strip as much as $700 billion from US banks' lending capacity.

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