UK Banks Complete First Tokenized Pound Deposits on Shared Platform
Seven major UK banks have successfully completed the first customer transactions using tokenized pound deposits on a shared platform. The participating banks are Barclays, HSBC, Lloyds Banking Group, Monzo, Nationwide, NatWest, and Santander.
The trial, known as the Great British Tokenized Deposit initiative, was conducted on Quant's distributed ledger technology (DLT) platform. The transactions tested included remortgage payments and a consumer purchase, demonstrating the movement of regulated bank money between institutions and into retail payments without losing protections associated with conventional deposits.
Tokenized deposits are digital records of existing money held in a bank account, remaining a liability of the issuing bank and maintaining the same legal status and deposit protections as conventional deposits. This distinction is crucial for the stablecoin debate, as tokenized deposits differ from tokens issued by non-banks against reserves with no direct claim.
The trial's success marks an important milestone in the UK's push towards digital money and payments, aligning with efforts by regulators like the Bank of England and the Financial Conduct Authority to prepare the financial system for tokenization and longer settlement hours. The next step will be testing the settlement of digital assets using tokenized customer money.