Britain’s largest banks have carried out the first interbank transfers of tokenized deposits, moving commercial bank money across blockchain systems without relying on privately issued stablecoins. The transactions form part of UK Finance’s Great British Tokenised Deposit project and mark a practical step toward programmable, interoperable bank money that remains a liability of the issuing institutions.

Mortgage and Marketplace Trials

Lloyds Banking Group, NatWest and Barclays completed two live remortgage transactions. Funds were held until the property transfer was confirmed on the ledger and then released automatically between the banks. In a parallel test, HSBC and two other lenders simulated an online marketplace purchase. Programmable deposits kept the buyer’s money reserved until delivery of the goods was verified, after which the funds moved to the seller. No physical goods changed hands in the marketplace exercise, which was designed to demonstrate conditional release mechanics.

UK Finance said the trials showed that tokenized deposits issued by different banks can move across separate blockchain platforms and settle obligations automatically. The project involves Barclays, HSBC, Lloyds Banking Group, NatWest, Nationwide, Santander and other participants, with technology and advisory support from Quant, EY and Linklaters.

Bank Liabilities Versus Private Stablecoins

Tokenized deposits are conventional commercial bank deposits represented as tokens on a distributed ledger. The liability stays on the issuing bank’s balance sheet and carries the same legal status and regulatory protections as ordinary account balances. Stablecoins, by contrast, are typically issued by private companies against reserve assets and create a separate claim outside the banking system.

The Bank of England has encouraged experimentation with tokenized deposits. Governor Andrew Bailey has previously cautioned that bank-issued stablecoins could introduce risks to financial stability, steering the industry toward deposit tokens that keep money within the existing two-tier monetary framework. Officials have described a future “multi-money” environment in which traditional deposits, tokenized bank deposits and regulated stablecoins could operate side by side and convert at par.

Next Steps: Rulebook and Digital Bonds

UK Finance plans to establish a dedicated company and develop a governing rulebook as the project moves beyond the pilot phase. Participating banks intend to issue three digital bonds in the first quarter of 2027 that can be traded and settled using the same tokenized deposit rails. The securities transactions would add a capital-markets use case to the payment and mortgage tests already completed.

Similar interbank tokenized deposit initiatives are under way elsewhere. In the United States, The Clearing House announced its own project in June. Interest from overseas regulators and industry groups has increased over the past year, according to UK Finance.

The successful UK trials keep digital money inside the regulated banking perimeter while adding speed, programmability and cross-institution interoperability. Further progress will depend on the rulebook and the planned 2027 bond issuances materializing as scheduled.