Britain's largest banks make first interbank transactions using tokenised deposits
Britain's largest banks have completed what the industry describes as the first transactions anywhere using tokenised deposits to move money between one another, a milestone for a blockchain-based form of bank money that the Bank of England favours over privately issued stablecoins.
For the first time, Britain's major banks successfully executed interbank transactions utilizing tokenised deposits. Lloyds, NatWest, and Barclays completed two remortgage transactions, while HSBC, along with a trio of other banks, conducted a customer-to-customer payment simulating a marketplace purchase. The trials revealed the practical implications of tokenised deposits, which are regular bank deposits recorded on a blockchain, maintaining the same legal status and protections as traditional money but enabling instantaneous settlement and conditional automation.
These trials displayed the potential of tokenised deposits, a concept explored by banks over a decade, but previously confined by the absence of interbank interoperability. The "Great British Tokenised Deposit" project, launched last year, addresses this issue by linking these banks together. The Bank of England prefers banks experiment with tokenised deposits over stablecoins, as the latter are crypto tokens usually pegged to the US dollar and issued by private entities outside the banking system.
The participating lenders now plan to establish a company and a governing rulebook, with an aim to issue three digital bonds in the first quarter of 2027, all to be traded and settled using tokenised deposits.
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