Tokenized Deposits May Be Banks’ Best Defense Against Digital Money Disintermediation
Banks are exploring tokenized deposits as a way to compete with stablecoins and prevent disintermediation from the decentralized finance sector. Stablecoins, backed by 100% reserves, offer efficiency but reduce banks' capacity for credit creation. Tokenized deposits, however, keep liabilities within the regulated banking system, allowing banks to offer programmable payments and atomic settlement while maintaining their role in credit provision. Citi Token Services is highlighted as an example of a platform enabling these capabilities for corporate clients. AI
IMPACT Banks are adopting tokenized deposits to retain market share against stablecoins, preserving their role in credit creation.