UK banks complete the first live customer payments in tokenised sterling
Serguey Asael Shinder2 min readUK banks have completed the first live customer transactions using tokenised sterling deposits, UK Finance announced this week. The transactions ran through the Great British Tokenised Deposit initiative, which UK Finance convened and which involves Barclays, HSBC UK, Lloyds Banking Group, Monzo, Nationwide, NatWest and Santander.
Three live retail transactions are described. In two remortgage completions, deposit funds were locked and then released automatically at completion, reducing manual checks and settlement delays; UK Finance notes that customers can keep earning interest on the funds until completion, and that the pilots also explored a digital link with HM Land Registry. In a consumer marketplace transaction, money was locked in a buyer's account and released only when the goods were exchanged with a private seller. The platform was developed by Quant as shared industry infrastructure for tokenised commercial bank money.
The next stage is digital assets. UK Finance says further pilots are expected over the coming months in which participating banks will issue digital debt instruments that can be traded and settled, with coupons paid in tokenised deposits, to show delivery-versus-payment-versus-reserves settlement. The Economic Secretary to the Treasury, Lucy Rigby, called the transactions a critical milestone, and the banks involved issued supporting statements.
What it means
A tokenised deposit is still an ordinary bank deposit - a liability of a regulated bank, with the same protections - recorded in a way that lets it be locked, released and moved by rules set in advance. The pilots chose examples where that programmability solves a familiar problem: conditional payments, where one side must not be paid until the other has delivered, and property completions, where money sits in limbo while paperwork moves.
For sterling's wider payment system, the significance is who is doing it. The initiative is run by the large UK retail banks together, on shared infrastructure, alongside the Bank of England's and the Treasury's own work on the future of retail payments. That positions tokenised bank money as the banks' answer to private stablecoins in the UK, much as a similar bank-led network is being planned in the United States with the same technology provider. How widely it spreads beyond pilots will depend on whether customers and businesses see the conditional-payment features as worth switching for.