UK banks complete first interbank tokenised deposit transactions

Lloyds, NatWest and Barclays have completed two remortgage transactions using tokenised deposits. Separately, three banks, including HSBC, carried out a peer-to-peer payment simulating a purchase on an online marketplace.

According to Reuters and UK Finance, these were the first transactions in which banks used tokenised deposits to move money between separate banking institutions. The tests form part of the Great British Tokenised Deposit project, coordinated by UK Finance.

Project tests interoperability between bank ledgers

Banks and financial institutions have explored blockchain-based representations of deposits and other assets for more than a decade. One of the main challenges has been that individual institutions developed separate systems that could not easily interact with each other.

The UK Finance pilot is designed to address this fragmentation by enabling tokenised deposits to move between banks. Participating institutions committed to the initiative through a pilot launched in 2025.

Programmable deposits tested in marketplace payment

In the simulated marketplace transaction, programmable deposits were used to reserve funds in the buyer's account. The money was released to the seller only after confirmation that the goods had been received.

Jana Mackintosh, Managing Director for Payments and Innovation at UK Finance, said the test demonstrated how the technology could reduce fraud risk. No real goods were exchanged as part of the simulation.

Tokenised deposits also used in remortgage transactions

The project also tested tokenised deposits in two remortgage transactions. Funds were locked and then released automatically after the underlying property transaction had been completed.

The tests show how programmable conditions can be linked to financial transactions, allowing funds to move only when defined events have taken place.

Tokenised deposits differ from stablecoins

Banks argue that tokenised assets could make settlement cheaper and more efficient than existing infrastructure. The Bank of England has previously indicated a preference for banks developing tokenised deposits rather than relying on stablecoins.

Tokenised deposits retain the legal status of money held in a bank account. Stablecoins are typically issued by private companies and can move funds outside the traditional banking system, which has led to concerns about credit availability and monetary sovereignty.

Project moves toward governance and production

The next phase includes plans to create a company, develop a rulebook and establish a governance framework. These steps are intended to support the transition from pilot activity to production use.

Participating banks also plan to issue three digital bonds in the first quarter of 2027. The bonds are expected to be traded and settled using tokenised deposits.

International interest in tokenised deposits is growing

UK Finance said other jurisdictions have approached the association over the past 12 months to understand the project and its development. Discussions with organisations in Europe have also taken place.

Similar work is underway in the US. In June 2026, The Clearing House announced an interbank tokenised deposit project involving the US banking sector.