Britain’s banking sector has taken a significant step towards blockchain-based finance, with major UK banks completing what UK Finance described as the world’s first interbank transactions using tokenised deposits. The development could reshape how banks move money and settle financial transactions in the future.
Lloyds, NatWest and Barclays conducted two mortgage-related transactions using tokenised deposits, while another group including HSBC tested a person-to-person payment linked to a simulated online marketplace purchase. The trials were carried out under the Great British Tokenised Deposit project, led by UK Finance.
The importance of the experiment goes beyond blockchain technology itself. Tokenised deposits essentially represent traditional bank money in digital token form. Unlike many stablecoins, which are privately issued, tokenised deposits remain linked to commercial bank deposits and retain their legal status as bank money.
The technology also introduces the possibility of programmable payments. In the simulated purchase, funds could be reserved and released automatically after a specified condition was met. In the mortgage transactions, funds were similarly locked and released after completion of the property transaction.
This could eventually make certain financial processes faster, more automated and potentially less vulnerable to fraud. However, the current transactions remain trials rather than evidence that conventional banking systems are about to disappear.
The next stage will be particularly important. UK Finance plans to establish a company and develop governance rules for moving the project towards production. Participating banks also plan to issue three digital bonds in the first quarter of 2027 that can be traded and settled using tokenised deposits.
The UK experiment also comes as financial institutions elsewhere explore blockchain-based settlement. The European Central Bank has launched Pontes, linking its payment infrastructure with blockchain-based financial markets.
The broader message is clear: blockchain in banking is increasingly moving from experimentation towards practical financial infrastructure. The real test now will be whether tokenised deposits can deliver efficiency and programmability at scale while maintaining trust, regulation and financial stability.