PREPARING THE BALANCE SHEET FOR DIGITAL MONEY By Michael A. Johnson, SVP & Southwest Regional Manager, PCBB Stablecoins, tokenized deposits, real-time payments and other digital-money models are moving the industry toward faster, more programmable and potentially 24/7 money movement. For community banks, the immediate issue is not whether every customer will adopt these tools tomorrow — it’s whether the bank’s liquidity framework, funding mix and contingency funding plan are ready if deposits become more mobile, rate-sensitive or concentrated. Liquidity risk is the risk that a bank cannot meet obligations as they come due without incurring unacceptable losses. In a faster-moving payments environment, that core risk doesn’t change, but the potential speed, timing and concentration of outflows may. The response shouldn’t be to abandon relationship banking or to hold excessive cash “just in case.” It should be to build a contingency liquidity plan to preserve options, such as protecting core funding, meeting accelerated outflows, and continuing to serve customers without forced asset sales or unnecessarily expensive funding. Digital Money Can Change Deposits Stablecoins and tokenized deposits have different structures, regulatory treatments and balance-sheet implications. Yet, both reinforce a broader trend: Moving money may become easier. Stablecoins can draw transaction balances into digital wallets or other nonbank payment channels. At the same time, stablecoin issuers may place large operating or reserve balances at banks. That means the effect may not be a simple, one-for-one decline in total deposits. Instead, funding could shift from diversified relationship balances toward larger, uninsured and potentially more volatile deposits. Tokenized deposits present a different consideration. They remain bank deposits, but they can be transferred and programmed using distributed-ledger infrastructure. If 20
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