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DLT and crypto not a priority for two-thirds of banks, Fed finds

Federal Reserve Board’s Senior Financial Officer Survey indicates DLT and crypto-related products do not have large effects on liquidity management

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  • Written by  Banking Exchange staff
DLT and crypto not a priority for two-thirds of banks, Fed finds

Two-thirds of banks do not classify distributed ledger technology (DLT) and crypto-related products and services as a priority in their growth strategy over the next two years, according to Federal Reserve research.

The Senior Financial Officer Survey (SFOS) focuses on senior financial officers at 80 banks and their strategies and practices for managing reserve balances.

One-fourth of survey respondents said DLT and crypto-related products was a “medium” or “high” priority. These technologies were generally regarded as not having significant impacts on liquidity management.

Over the next two to five years, 63% of respondents suggested DLT or crypto-related products on their bank’s liquidity management practices was “not important” compared to 33% who voted this for the next five to 10 years.

Some banks are actively monitoring their DLT and crypto-related product plans, and “will adapt to the landscape as needed”.

Over half the respondents (63%) reported that their bank does not plan to take actions to increase or decrease the size of its balance sheet through the remainder of the year.

The majority of respondents (71%) indicated that their bank expects its balance sheet size to remain roughly unchanged over that same period.

According to the survey, for nearly all of the liability categories, 53% of respondents indicated that their bank is not expecting the level of such liability to change through the end of the year.

Looking back over the past six months (from May), the banks highlighted that their deposit betas for the beginning portion of the year were under 10%.

This indicates that banks had passed through only a few basis points of the 25-basis point increase in the target range for the federal funds rate in March to their customers, the board explained.

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