UK Banks Complete First Interbank Tokenised Deposit Transfers, Favoring Bank Tokens Over Stablecoins

Britain’s largest banks have completed the first interbank transfers of tokenised deposits, moving funds on blockchain infrastructure while keeping the liability on the banks’ balance sheets. The trial, part of UK Finance’s Great British Tokenised Deposit project, demonstrates a clear preference for bank‑issued tokens over privately issued stablecoins.

Why Tokenised Deposits Instead of Stablecoins

Tokenised deposits are ordinary bank deposits represented as blockchain tokens, retaining the same legal status as money already held in an account. In contrast, stablecoins are typically issued by private companies and sit outside the traditional banking system. By using tokenised deposits, banks modernise their own payment rails without transferring liability to external issuers.

How the Pilot Operated

Lloyds, NatWest and Barclays processed two mortgage transactions, while a separate group of banks simulated a marketplace purchase. The latter used programmable deposits that held the buyer’s funds until the goods were confirmed received, a setup that could reduce fraud risk.

Regulatory Context

Bank of England Governor Andrew Bailey has warned that privately issued stablecoins could destabilise the financial system, encouraging lenders to adopt tokenised deposits instead. The central bank maintains an issuance cap for bank‑issued tokens while easing other restrictions.

Next Steps

The project will move toward establishing a governing rulebook and a dedicated company. Participating lenders aim to issue three digital bonds in the first quarter of 2027, settled using tokenised deposits. The initiative is part of a broader UK institutional tokenisation effort that includes asset managers.

International Comparisons

In the United States, The Clearing House announced a similar interbank tokenised deposit project in June, highlighting a growing global interest in bank‑issued digital tokens.