Dallas Fed: tokenized deposits could strip $700B from bank lending

The Dallas Federal Reserve warned that tokenized deposits, combined with programmable money and AI agents, could strip roughly $700 billion from U.S. banks' lending capacity. The scenario sees customers' funds automatically switching banks in pursuit of higher yields.

Programmable deposits and AI agents may enable instantaneous, automated bank switching, driving up bank funding costs and squeezing the capital available for traditional lending. The warning adds to a growing debate over how tokenized money reshapes bank balance sheets and deposit stability.