Barclays, Lloyds, NatWest Tokenize Deposits in Interbank Transactions

UK's largest banks have completed the first interbank transactions using tokenized deposits, testing blockchain-based commercial bank money across mortgage and person-to-person payments.

The banks, including Barclays, Lloyds, NatWest, HSBC, Nationwide, and Santander, participated in the Great British Tokenised Deposit initiative, designed to test interoperability between institutions. The project aimed to address issues with separate infrastructure developed by individual institutions, which created problems when assets needed to move between them.

Two remortgage transactions were completed using tokenized deposits, while a separate group of banks tested a person-to-person payment linked to a simulated online marketplace purchase. In the test, programmable deposits allowed money to remain reserved in a buyer's bank account until the agreed conditions of the transaction were met, reducing fraud risks.

UK Finance plans to establish a company and governance framework for the project, with three digital bonds due to be issued and settled using tokenized deposits in early 2027. The project comes as UK regulators work through how different forms of digital money should operate alongside conventional bank deposits.