UK banks complete first interbank tokenized sterling deposit transactions

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UK banks tokenized sterling transactions

Highlights

Barclays, HSBC, Lloyds Banking Group, Monzo, Nationwide, NatWest and Santander conducted the UK's first interbank tokenized sterling deposit transactions on Quant's shared platform.
The Bank of England and Financial Conduct Authority are preparing the UK system for broader payment tokenization and longer settlement hours while evaluating both tokenized deposits and stablecoins.
Tokenized deposits, remaining bank liabilities, aim to offer faster settlement, enhanced cash-flow management, and increased transparency compared to stablecoins, signaling banks' push for regulated digital money alternatives.

Cross-bank tokenized payment trials advance

According to CoinDesk, Barclays, HSBC, Lloyds Banking Group, Monzo, Nationwide, NatWest and Santander take part in the Great British Tokenized Deposit initiative, which is designed to test whether regulated bank money can move in tokenized form between institutions and in retail payments.

The transactions include remortgage payments and a marketplace payment test on a shared platform built by distributed ledger technology provider Quant. The project differs from a recent Lloyds initiative that used tokenized deposits to buy a tokenized gilt within its own setup, because this trial moves deposits across a common system involving several banks.

The group next plans to test settlement of digital assets using tokenized customer money. Tokenized deposits are digital records of money already held in a bank account, and unlike stablecoins they remain a liability of the issuing bank and keep the protections attached to conventional deposits.

Regulatory push and payments impact

The trials come as the Bank of England and the Financial Conduct Authority prepare the UK financial system for tokenization and longer settlement hours. Regulators are seeking to support tokenized markets while also considering stablecoins for institutional settlement.

Lucy Rigby, economic secretary to the Treasury, says the live transactions show how tokenized deposits can deliver practical benefits through contingent payments that give customers greater control over their money. For businesses and consumers, the model has the potential to speed settlement, improve cash-flow management and make payments more convenient, transparent and secure.

Gilbert Verdian, founder and CEO of Quant, says tokenized deposits can play a key role in the evolution of digital money and payments in the UK and beyond. The latest tests suggest large banks are trying to position tokenized deposit infrastructure as a regulated alternative within the broader digital assets and payments market.

In our earlier article on the Bank of England’s warning that persistently high energy prices could reignite inflation, we outlined policymakers’ focus on second-round effects through wages, pricing and expectations. We noted that if energy costs remain elevated without clearer signs of disinflation or weaker activity, the BoE could be pushed toward tighter policy, keeping the UK rate path closely linked to energy-market developments.

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