Tokenized Money for Banks: Tokenized deposits 1A. Tokenized deposit An existing deposit recorded on a tokenized ledger. -Balance-sheet impact: If the legal claim and redemption terms remain unchanged, capital, LCR and NSFR should broadly follow the underlying deposit. -Advantage: Programmability with the smallest prudential departure from conventional deposits. 1B. Deposit token A native transferable token that represents a direct, unsecured claim on the issuing bank. -Balance-sheet impact: No automatic increase in RWA, but Basel does not permit stable-retail-deposit treatment. If holders cannot always be identified, it is treated as unsecured wholesale funding, weakening LCR and NSFR. -Advantage: Bank money that can circulate beyond the bank’s conventional ledger. First-party stablecoins 2A. Own balance A reserve-backed stablecoin issued directly by the bank. - Balance-sheet impact: If backed by segregated assets, redemptions within 30 days receive a 100% LCR outflow before eligible HQLA offsets. Segregated reserves also attract NSFR encumbrance treatment, while issuance can increase leverage exposure. - Advantage: Full control over issuance, reserves, distribution and economics. 2B. Subsidiary A bank-owned entity issues the stablecoin from a separate legal balance sheet. - Balance-sheet impact: If consolidated, much of the prudential impact returns to the banking group. - Advantage: Legal separation and dedicated governance. 2C. Consortium Multiple banks issue through a common entity or shared arrangement. - Balance-sheet impact: The direct effect depends on consolidation and commitments. Equity stakes, guarantees, redemption obligations and liquidity facilities can consume CET1, leverage and LCR capacity. - Advantage: Shared infrastructure and broader distribution without one bank carrying the entire system. Third-party stablecoins 3A. Prefunded The bank holds third-party stablecoins before customer demand arises. - Balance-sheet impact: Third-party issued stablecoins normally receives at least 85% RSF and produces no assumed LCR inflow. Replacing cash or reserves with it therefore weakens liquidity ratios. Capital treatment depends on its Basel classification. - Advantage: Liquidity, immediate availability, product distribution and operational simplicity. 3B. Secured loan The bank finances stablecoin liquidity through a collateralized loan. - Balance-sheet impact: The loan enters RWA and leverage exposure. Collateral reduces capital only if Basel recognizes it, while funding the loan with HQLA can weaken LCR and NSFR. - Advantage: Provides liquidity without holding the stablecoin inventory directly. If you’d like to find out more, I’ve included the research paper in the first comment