BIS wants banks to tokenize deposits. It also warns that could make bank runs faster

The Bank for International Settlements, an international financial institution which is owned by members' central banks, is pushing tokenized bank deposits toward the center of the future monetary system, even as its top official warns that making deposits available around the clock could accelerate withdrawals during financial stress.

• Pablo Hernández de Cos, the BIS general manager, laid out the tradeoff on Friday at the Jackson Hole Economic Symposium, arguing that tokenized deposits offer a better way to bring blockchain-style programmability into mainstream finance than stablecoins.
• He said tokenised deposits "should carry the bulk of day‑to‑day payments and wholesale settlement, within prudential perimeters and with settlement in central bank money."
• Tokenized deposits are essentially ordinary commercial-bank deposits recorded on programmable digital infrastructure.
• Unlike stablecoins issued by companies such as Circle or Tether, they remain direct claims on a bank and can ultimately settle through central bank money.
• De Cos called them a "more direct path to harness tokenisation" while preserving the existing monetary system.

Faster payments can mean faster outflows

But buried inside that push is a financial stability problem. De Cos warned that if tokenized deposits are introduced on individual bank networks, smaller lenders could face tougher competition and more rate-sensitive funding.

More importantly, he said "round-the-clock operability could quicken deposit outflows" and suggested additional backstops may be needed to protect financial stability.

The speech doesn't explicitly say tokenization will cause bank runs. Its narrower warning is that deposits capable of moving around the clock could leave a bank more quickly once depositors decide to withdraw, one of the mechanics that can make a run harder to contain.

The Dallas Fed just put numbers on the same problem

The warning also came only three days after economists at the Federal Reserve Bank of Dallas examined what happens when bank deposits become easier to move.

Rosie Levy and Srini Ramaswamy, economists at the Dallas Fed, said instant settlement could let depositors move money between banks almost immediately in search of higher rates.

Programmable deposits combined with agentic AI could eventually automate those moves without requiring the depositor to act each time.

• Their estimates suggest that a 10% reduction in how long deposits remain at banks could reduce the banking system's maturity-transformation capacity by about $580 billion in 10-year equivalents.
• A 10% increase in deposits' sensitivity to interest rates could reduce banks' duration-risk capacity by roughly $700 billion in 10-year equivalents.
• Those figures are measures of balance-sheet duration capacity, not estimates that banks would directly cut lending by $580 billion or $700 billion.

The Dallas Fed researchers separately warned that real-time tokenized deposits could increase both deposit volatility and uncertainty around withdrawals, potentially forcing banks to keep larger pools of highly liquid assets such as reserves and Treasuries.

That leaves an unusual tradeoff at the heart of the BIS vision. The same features making tokenized deposits attractive — instant settlement, programmability and 24/7 operation — could also make bank funding more mobile.

The BIS still wants the technology scaled up, but its own warning suggests the banking system may need new liquidity defenses if deposits eventually move as quickly as the digital assets they are meant to compete with.