Kansas City Fed warns tokenized deposits pose challenges for bank funding management

AI-assisted source summary · not independently verified. Content standards

Kansas City Fed published a research brief stating that tokenized deposits could allow corporate treasuries to transfer bank deposits outside traditional banking and settlement hours, requiring banks to manage faster, round-the-clock, and more volatile outflows. Demand is mainly coming from multinational corporate treasury departments seeking round-the-clock liquidity management, payments to international suppliers, and cash settlement for tokenized securities. The Clearing House plans to launch a tokenized deposit network for participating institutions in the first half of 2027, and the changes will also affect banks’ liquidity management, deposit pricing, and corporate treasury services.