UK’s largest banks complete first interbank tokenised deposit transactions

Britain’s biggest banks have completed the first interbank transactions using tokenised deposits, a blockchain‑based representation of commercial bank money. The tests covered two remortgage payments and a simulated online marketplace transaction.

Interbank tokenised deposit pilots

Lloyds Banking Group, NatWest and Barclays executed two remortgage transactions where funds were locked on a distributed ledger and released automatically when the property settlement was completed. A separate test involving HSBC, Barclays, Nationwide and Santander simulated a person‑to‑person payment linked to an online marketplace purchase, with programmable deposits holding the buyer’s money until receipt of goods was confirmed.

How tokenised deposits work

Tokenised deposits are digital representations of traditional sterling deposits on a blockchain or other distributed ledger. The underlying liability remains with the issuing bank, preserving the legal status and regulatory protections of a conventional deposit.

Regulatory context and future plans

UK Finance’s Great British Tokenised Deposit initiative aims to create a common framework for moving digital bank money between institutions. The pilot involved Barclays, HSBC, Lloyds, NatWest, Nationwide and Santander, with support from Quant, EY and Linklaters. Following the successful tests, UK Finance plans to establish a company and governance rulebook, and to issue three digital bonds settled with tokenised deposits in early 2027.

Implications for the wider market

The experiments demonstrate potential benefits such as faster payments and reduced fraud risk while retaining the protections of traditional bank deposits. They also differentiate tokenised deposits from stablecoins, which are typically issued by private entities and represent a separate claim on the issuer.

Next steps

Beyond mortgages and marketplace payments, the project will add a securities‑settlement use case with digital bonds. The UK government is also preparing a Digital Gilt Instrument (DIGIT), with the first issuance expected in the first quarter of 2027, using tokenised deposits for on‑chain cash settlement.