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Seven UK banks have completed live pilot transactions using tokenised deposits, testing how commercial bank money can be moved across digital networks and programmed to execute when predefined conditions are met.
The transactions were conducted under the Great British Tokenised Deposit (GBTD) initiative, convened by UK Finance and involving Barclays, HSBC UK, Lloyds Banking Group, Monzo, Nationwide, NatWest and Santander.
Banks test programmable commercial bank money
Tokenised deposits enable commercial bank money to be represented and transferred on digital networks while retaining the backing and trust associated with deposits held at regulated banks.
The technology could enable faster payments and more efficient settlement while allowing transactions to be programmed around specific conditions. Potential applications include property purchases, online commerce, digital asset transactions and the settlement of financial instruments.
The first transactions under the GBTD initiative included remortgage completions and a consumer shopping trial.
In both cases, programmable tokenised deposits allowed funds to be locked in a buyer’s account and released only after the required conditions had been met, including the successful exchange of goods.
The model demonstrates how programmable payments could give customers greater control over when funds are released while reducing some of the risks associated with transactions that depend on separate payment and delivery processes.
Quant provides shared infrastructure
The transactions were executed on the GBTD platform, developed by Quant as shared industry infrastructure for tokenised commercial bank money in the UK.
The initiative brings multiple banks into a common environment to test how tokenised deposits could operate across financial institutions rather than within individual proprietary systems.
This interoperability is expected to be important as banks and other financial institutions explore the use of distributed ledger technology and tokenised forms of money for payments and financial-market transactions.
The UK pilots form part of wider efforts by financial institutions globally to develop digital payment infrastructure and explore alternatives to privately issued stablecoins.
Tokenised deposits move towards digital-asset settlement
Further GBTD pilots are expected in the coming months, including tests that connect tokenised customer money with digital assets to facilitate more seamless transactions.
Participating banks are also expected to issue digital debt instruments that can be traded and settled using the infrastructure, with coupon payments made through tokenised deposits.
The programme is designed to explore delivery-versus-payment-versus-reserves arrangements, in which the delivery of an asset, the corresponding payment and the underlying reserve movements can be coordinated within the same transaction process.
Such capabilities could have implications for the settlement of securities and other digital assets by reducing the separation between asset transfer and payment.
UK banks explore next phase of payment infrastructure
Jana Mackintosh, managing director of payments and innovation at UK Finance, said the live transactions demonstrate the practical applications of tokenised deposits and programmable payments.
“These live transactions show how tokenised deposits can deliver practical, real-world benefits and contingent payments that give customers greater control over their money. By bringing the industry together, GBTD is demonstrating how tokenised deposits can strengthen the UK’s payments infrastructure, support innovation across the economy and drive the UK’s competitiveness internationally.”
The pilots come as banks and payment infrastructure providers continue to assess how tokenisation can be applied to commercial bank money, financial assets and settlement systems.
For the UK banking sector, the GBTD initiative provides a live testing environment for interoperability, programmable payments and digital-asset settlement, while offering insight into how tokenised deposits could form part of the next generation of regulated payment infrastructure.
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