Tokenised deposits reshape core banking infrastructure
The move toward tokenised money is reshaping how banks think about their core infrastructure, with different forms of digital currency creating varying levels of demand on traditional systems. While stablecoins and central bank digital currencies (CBDCs) largely bypass the core, tokenised deposits and deposit tokens are driving deeper architectural changes that challenge decades-old assumptions.
Stablecoins and CBDCs: Minimal Core Impact
Institutional stablecoins operate independently of core banking systems, requiring no integration or ledger updates. When customers convert funds into stablecoins, it resembles a cash withdrawal—the money exits the bank’s balance sheet entirely. Some banks, like those in the Qivalis consortium building a euro stablecoin under MiCA regulations, are choosing to issue stablecoins directly. However, since Qivalis functions as a separate legal entity outside existing core infrastructure, these initiatives don’t affect core operations.
Retail CBDCs follow a similar pattern. Banks distribute digital currency and manage associated wallets, but once customers hold CBDCs, the core no longer tracks their movement—mirroring how cash is handled today. The primary change involves adding wallet management layers rather than restructuring the underlying ledger. Wholesale CBDCs introduce more complexity, enabling continuous reserve tracking on shared central bank ledgers with immediate settlement. This impacts treasury and settlement systems but leaves the core ledger itself largely untouched.
Tokenised Deposits: Pressure on the Core
Tokenised deposits represent the first significant stress point for core banking systems, introducing a new component known as the token ledger. Unlike stablecoins, tokenised deposits maintain their presence in the core while adding programmable tokens on top. Traditional deposit balances remain recorded in the core, with the token ledger managing token creation, destruction, and synchronization between blockchain events and core processes.
This model preserves existing core functionality while extending it into programmable money domains. Projects like the UK’s GBTD programme and Hong Kong’s EnsembleTX exemplify this approach, keeping each participating bank’s core as the system of record. The token ledger acts as an intermediary, translating blockchain activities into core-compatible instructions without replacing legacy infrastructure.
Several operational challenges emerge from this hybrid structure. Real-time minting and burning of tokens requires constant communication between the token ledger and core, moving beyond traditional batch processing windows. Banks must track reserved token balances separately from total deposits, creating a need for enhanced shadow balance capabilities within the core. Smart contract execution depends on up-to-date token balances, which may be delayed if the core operates on batch cycles.
Interest calculations and regulatory reporting face similar timing issues. When tokens move during the day, the core’s view of deposit ownership lags behind actual holdings. At institutional scales, this discrepancy complicates overnight interest accruals and compliance reporting. Governance questions also arise around smart contract modifications, requiring clear protocols for deployment, testing, and change control before any client transactions occur.
Related Post: Nasdaq Whitepaper: Scaling Banks in an AI Risk Era
Deposit tokens mark a decisive architectural shift, effectively hollowing out the core by making the blockchain the ledger of record. In this model, settlement and record-keeping converge on-chain, eliminating delays between transaction completion and ledger updates. JP Morgan’s JPMD, launched on Base in late 2025, demonstrates this approach—transactions don’t require mapping back to the core, though aggregated positions still feed into conventional regulatory reporting and financial statements.
Reconciliation and Reporting: The Core’s Remaining Role
Even as deposit tokens reduce the core’s involvement in transaction processing, reconciliation functions persist. Daily position aggregation requires pulling on-chain token balances back into conventional reporting systems. This ensures compliance with Basel III capital requirements and liquidity coverage ratios, which still rely on core-based financial statements.
Capability Gaps and Incremental Migration
Multi-currency support presents another hurdle. While some blockchains enable foreign exchange settlements, core systems handle legacy currency conversions and hedging strategies. Cross-border payment rails like SWIFT also remain outside token ledger scope, necessitating continued core integration for international transfers.
Regulatory reporting remains a core function. Authorities demand granular transaction logs, stress test results, and systemic risk metrics. These reports aggregate data from both on-chain activity and traditional banking records, ensuring supervisors can audit hybrid portfolios effectively.
Planning for Programmable Money Integration
Banks that do not prepare for tokenized money systems risk falling behind as digital currency adoption accelerates. The token ledger model offers a pragmatic path forward, allowing institutions to enter programmable money markets without replacing existing core infrastructure. This approach keeps each bank’s legacy core as the ledger of record while adding a new layer for token management.
The token ledger handles minting and burning operations in real time, requiring continuous synchronization with core systems rather than overnight batch processing. When customers move funds into tokenized deposits, the token ledger creates corresponding tokens while instructing the core to reserve those balances. Redemption triggers token destruction and immediate fund release back to the core ledger.
