- UK banks completed interbank transactions using tokenised deposits, testing blockchain-based commercial bank money across separate institutions.
- Great British Tokenised Deposit will expand toward wider use, with digital bond trials planned for 2027.
- The Bank of England is also advancing its framework for privately issued stablecoins.
Britain’s largest banks have completed what UK Finance describes as the “world’s first interbank transactions using tokenised deposits,” allowing blockchain-based representations of commercial bank money to move between separate banks.
The transactions are part of the Great British Tokenised Deposit (GBTD) project, an industry initiative led by UK Finance to test how tokenised sterling deposits can be used for payments and other financial transactions. UK Finance told Reuters that Lloyds, NatWest and Barclays completed two mortgage-related transactions, while another group of three banks, including HSBC, carried out a simulated person-to-person payment linked to an online marketplace.
Tokenised Deposits Tested in Mortgages and Online Payments
In the online marketplace test, funds were set aside in the buyer’s account and programmed to move to the seller after the goods were received. The transaction was a simulation, so no actual goods changed hands, but it demonstrated how programmable bank deposits could link a payment to the completion of a specific condition.
The two remortgage transactions used a similar approach. Funds were locked and automatically released once the property transaction was completed. UK Finance said the testing could help reduce fraud and make parts of the remortgaging process more efficient.
Tokenised deposits are digital representations of traditional commercial bank money. Unlike stablecoins, which are generally issued by private companies, tokenised deposits remain claims on commercial banks and retain the legal and regulatory characteristics of conventional deposits. UK Finance says the technology can add features such as programmability and faster settlement.
The interbank element is significant because banks have previously developed separate tokenisation systems, making it difficult for tokenised money issued by one bank to interact with another bank’s system. A July report from HM Treasury described GBTD as a private-sector platform designed to allow different banks’ tokenised deposits to interact.
The project is now expected to move beyond its pilot phase. UK Finance plans to establish a dedicated company and develop a rulebook and governance framework to support wider production use. Participating banks also plan to issue three digital bonds in the first quarter of 2027 that can be traded and settled using tokenised deposits.
The development comes as the UK expands its broader digital-finance infrastructure. HM Treasury said earlier this month that the government is supporting work involving stablecoins, tokenised deposits and digital settlement, while specifically highlighting the progress of the GBTD initiative.
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