Do banks choose tokenised deposits over stablecoins to guard their balance sheets?

Banks are ramping up tokenised deposit infrastructure use whilst tokenised central bank money remains in the experimental phase.

Banks are leading the way in advancing tokenised deposits whilst central bank money remains largely experimental, according to McKinsey & Company.

Major global systematically important banks are already moving towards larger volumes of payment activity compared to stablecoins—at $4t in annual flows, compared to stablecoins’ approximately $400b, the management consulting firm said in a 21 May 2025 article.

Unlike stablecoins, these flows are embedded directly into existing institutional payment, liquidity, and treasury workflows.

JPMorgan’s Kinexys, for example, is estimated to facilitate more than $1t in tokenised deposit transfers annually. Dozens of other institutions, such as Citibank and BNY, have publicly disclosed live deployments or pilots with their own proprietary platforms.

One reason banks likely preferred tokenised deposits over stablecoins is because of the impact on their balance sheets, according to the report.

McKinsey noted that for every $1,000 converted into a third-party stablecoin, typically only 15% returns to the banking system as wholesale reserves. The remaining 85% is usually invested in off-balance-sheet assets, such as US Treasury securities, based on an analysis by McKinsey.

In contrast, tokenized deposits keep the full $1,000 on the bank’s balance sheet.

“Rather than creating a new form of private money, banks simply represent existing deposit liabilities on blockchain rails. This approach preserves the established legal, regulatory, and accounting frameworks inherent to traditional banking,” McKinsey said.

Tokenised central bank money remains largely experimental, with early projects highlighting complications around monetary sovereignty. Tokenised money potentially requires legislative and regulatory changes, McKinsey said.

France, Singapore, and Switzerland have explored wholesale use cases but have not yet moved towards widespread commercial release.

“For now, even optimists predict that it could be several years before central bank digital currencies become ubiquitous,” McKinsey wrote.

Tokenised central bank money is necessary for true finality in international settlement, however.

“While banks can settle between themselves within closed or private networks, central bank money is the only asset that eliminates counterparty risk among different banking “islands.” Without this neutral settlement layer, true global finality—in which value moves across disparate systems without residual institutional risk—remains elusive,” McKinsey said.