Seven UK lenders move tokenized deposits across institutions for first time
Barclays, HSBC, Lloyds, Monzo, Nationwide, NatWest and Santander have completed interbank transfers of tokenized deposits on a shared platform built by Quant. The tests covered remortgage payments and a simulated marketplace payment, with regulators preparing for broader tokenization. The initiative aims to establish a governance structure and issue digital bonds by early 2027.
The initiative builds on years of experimentation with distributed ledger technology in banking, where most prior pilots were confined to single institutions. By moving tokenized deposits across seven different banks on a shared Quant-built platform, the tests demonstrate a practical path toward interoperable digital money within the existing banking framework. Tokenized deposits differ from stablecoins in that they remain direct liabilities of the issuing bank, preserving deposit protections and regulatory oversight.
UK Finance plans to formalize the effort by establishing a dedicated company and governance structure, with a target of issuing and settling three digital bonds through tokenized deposits by early 2027. The Bank of England and Financial Conduct Authority are simultaneously preparing the regulatory environment for broader tokenization and extended settlement hours, while still evaluating whether stablecoins might serve institutional settlement needs.
This development could reshape how everyday financial transactions settle in the UK, potentially reducing friction in processes like mortgage completions and marketplace payments. Consumers may eventually benefit from faster, more automated transactions, while businesses could see reduced administrative costs. However, the transition depends on regulatory frameworks and institutional adoption, meaning widespread impact may take years. The involvement of major banks suggests tokenized deposits could become a mainstream complement to traditional payments, though the full societal effects remain uncertain.