UK banks test interbank tokenised deposits in live payments
UK banks tested tokenised deposits in remortgages and a marketplace payment, moving bank money between institutions as plans turn toward production.
Seven UK banks have completed the first live customer transactions using tokenised sterling deposits, including remortgages and a marketplace payment, testing whether bank money can move between institutions on shared blockchain infrastructure. UK Finance announced the results on September 24 as part of its Great British Tokenised Deposit initiative. UK Finance’s announcement lists Barclays, HSBC UK, Lloyds Banking Group, Monzo, Nationwide, NatWest and Santander as participants.
The step forward is interbank settlement: earlier blockchain projects often used separate bank systems that could not transact with one another. In a report citing UK Finance, Reuters said Lloyds, NatWest and Barclays carried out two remortgage transactions, while a group of three banks including HSBC ran the marketplace payment test. The trials used a shared platform developed by Quant.
How did the transactions use tokenised deposits?
A tokenised deposit is a digital representation of money held at a commercial bank. The deposit remains a bank liability, while the token can be programmed to move when specified conditions are met. In the remortgage trials, funds were locked and released automatically at completion. UK Finance said the approach could reduce manual checks and settlement delays; mortgage customers could also continue to earn interest on funds held until completion.
For the marketplace test, the buyer’s funds stayed set aside until the goods were exchanged, then were released to the seller. Reuters reported that the payment simulated an online purchase: no real goods changed hands. So the test showed how conditional payments could work, but did not establish whether the process reduces fraud in ordinary commerce.
How does this compare with stablecoins and existing payments?
Tokenised deposits keep money within commercial banking, with the regulatory protections of conventional deposits, according to UK Finance. Stablecoins are typically issued by private companies. Reuters reported that the Bank of England has said it would prefer banks to experiment with tokenised deposits rather than stablecoins. That gives banks a way to add programmable transfers while keeping deposits on their balance sheets; it also leaves the service dependent on banks and shared infrastructure adopting compatible rules.
The project’s next steps point to the gap between a successful pilot and an operational service. UK Finance says further pilots are expected to test settlement between tokenised customer money and digital assets. Reuters reported that participating banks plan to establish a company and rulebook, and aim to issue three digital bonds in the first quarter of 2027 for trading and settlement with tokenised deposits. Until those steps are completed, the trials do not show how broadly the system will be available or how it will work at scale. Reuters’ report gives the transaction details and the planned milestones.