Seven of the U.K.'s largest banks have executed the world's first customer transactions using tokenized British pound deposits on a shared platform, according to an announcement Thursday.
Barclays, HSBC, Lloyds Banking Group, Monzo, Nationwide, NatWest and Santander participated in the Great British Tokenized Deposit initiative. The distributed ledger technology platform was built by Quant.
The trial included remortgage payments and a consumer purchase test, examining whether regulated bank money can move in tokenized form across institutions and support retail payments. The cross-institution movement of deposits on a common system distinguishes this effort from a recent Lloyds initiative that used tokenized deposits to purchase a tokenized gilt within its own arrangement.
Tokenized deposits are digital records of money already held in a bank account. Unlike stablecoins, they remain liabilities of the issuing bank and retain conventional deposit protections.
The tests arrive as the Bank of England and Financial Conduct Authority prepare the U.K.'s financial system for tokenization and extended settlement hours. Regulators are considering stablecoins for institutional settlement while supporting tokenized markets.
Lucy Rigby, economic secretary to the Treasury, said: "These live transactions show how tokenized deposits can deliver practical, real-world benefits, contingent payments that give customers greater control over their money."
Gilbert Verdian, founder and CEO of Quant, said: "Tokenized deposits have the potential to play a key role in the evolution of digital money and payments in the U.K. and beyond."
For businesses and customers, tokenized deposits could speed settlement, improve cash-flow management and provide more convenient, transparent and secure payment methods, according to the announcement.
The group will next test the use of tokenized customer money in settling digital assets.
