Seven Banks, Including HSBC and Barclays, Test Tokenized Deposits: What Could Change About Payments?
In the UK, seven banks, including HSBC and Barclays, carried out customer transactions on a shared platform using tokenized versions of pound sterling deposits. The tests explored how money held in bank accounts could be used across different institutions and for purchases.
According to a report by CoinDesk, which cited the initiative’s announcement, Barclays, HSBC, Lloyds Banking Group, Monzo, Nationwide, NatWest and Santander joined forces on the Great British Tokenized Deposit project. The platform, developed by distributed ledger technology provider Quant, was used to test mortgage refinancing payments and a consumer purchase.
The announcement described these transactions as the world’s first customer transactions carried out on a shared platform using tokenized pound sterling deposits. The project’s distinction is that the transactions were tested on a shared system spanning multiple banks rather than within a single bank’s own infrastructure. Lloyds had previously purchased a tokenized UK government bond using tokenized deposits, but that initiative was conducted within its own infrastructure.
What could change about customers’ money in the bank?
A tokenized deposit is a digital token representation of money already held in a bank account. Under this model, the money remains a liability of the issuing bank and retains the protections associated with traditional deposits; it is not the same as issuing a separate stablecoin.
The benefits targeted by the project include faster payment settlement, easier cash flow management for businesses, and greater control for customers over their money through payments subject to specific conditions. Lucy Rigby, Economic Secretary to the UK Treasury, said the live transactions demonstrated how such conditional payments could be used in real life. These are capabilities the system aims to offer; the test does not mean the service is available to all bank customers.
Digital asset transactions are next
In the next phase, the banks will test using tokenized customer money to complete settlement for digital asset trades. This will take the work beyond mortgage and shopping scenarios.
The tests are taking place as the Bank of England and the Financial Conduct Authority prepare the financial system for tokenization and longer settlement hours.