UK banks complete world's first interbank tokenised deposit transactions

Britain's biggest banks completed the world's first interbank transactions using tokenised deposits. Lloyds, NatWest and Barclays carried out two mortgage transactions. A trio of banks including HSBC ran a person-to-person transaction that simulated an online marketplace purchase. UK Finance ran the trials through its Great British Tokenised Deposit project. Tokenised deposits have the same legal status as money deposited in a bank account. Banks say tokenised assets could be cheaper and more efficient to move than assets through existing systems. The Bank of England has said it would prefer banks to innovate with tokenised deposits instead of stablecoins. Stablecoins are typically issued by private companies and remove money from the banking system. This has raised concerns about credit costs and monetary sovereignty. Programmable deposits in the simulated purchase held funds in the buyer's account until the goods were received. No real goods changed hands during the test. Jana Mackintosh said the technology could lower fraud risks. The banks also completed two remortgage transactions using tokenised deposits. The project plans to establish a company and develop a rulebook and governing framework for full production. The participating banks plan to issue three digital bonds in the first quarter of 2027. The bonds are intended to trade and settle with tokenised deposits. The Clearing House announced a separate interbank tokenised deposit project in June.