Finance22 September, 20263 min read
Lloyds, NatWest, and Barclays Complete First Interbank Tokenized Deposit Transfers in Britain
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Britain's largest banks completed the first interbank transfers using tokenised deposits. Mortgage refinancing and marketplace payments were tested on blockchain rails during the operations.
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Tokenized deposits go live
Britain’s largest banks completed the first interbank transfers using tokenized deposits under the Great British Tokenised Deposit project run by UK Finance, with Lloyds Banking Group, NatWest, and Barclays conducting two mortgage refinancing transactions using tokenized deposits. UK Finance said the experiments also included a customer-to-customer payment simulating an online marketplace purchase, with programmable deposits holding the buyer’s money and releasing it only after a delivery condition was met. The Bank of England framed tokenized deposits as an update to existing bank money, and Governor Andrew Bailey said the bank is working with banks to design and implement the introduction of tokenized money.
“Lloyds Banking Group, NatWest, and Barclays conducted mortgage refinancing transactions using tokenized deposits.”
Quant’s platform underpinned the tests, and CoinDesk said the shared platform was built by Quant, with the trial including remortgage payments and a test of a consumer purchase. The participating banks in the broader pilot included Barclays, HSBC, Lloyds, Monzo, NatWest, Nationwide, and Santander, while Quant, EY, and Linklaters provided technical and legal support.
Programmable payments, shared rails
In the remortgage trades, funds were automatically released between banks as soon as the property transfer was confirmed, and the tests demonstrated how programmable and instant payments could be triggered by pre-set parameters in smart contracts. In the digital market test, the buyer’s money remained held and was only credited to the seller after delivery was verified, even though no physical goods were exchanged. 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," as the project moved beyond single-institution trials.
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," linking the milestone to broader digital-money evolution. UK Finance’s managing director for payments and innovation, Jana Mackintosh, said the programmable features could reduce fraud risk by tying payment release to verifiable conditions, and she added that other jurisdictions had been speaking to UK Finance in the last 12 months.
Bonds, rules, and stablecoin rivalry
UK Finance and participating banks said they plan to issue three digital bonds in the first quarter of 2027 that can be traded and settled using tokenized deposits, extending the technology from mortgage and marketplace payments into capital markets. The Bank of England noted it prioritizes tokenized deposits over private dollar-denominated stablecoins, and the Bank of England said innovation must occur within a regulated framework and under the guarantees of the traditional banking system. Deputy Governor Sarah Breeden argued for orderly coexistence of conventional deposits, tokenized deposits, and regulated systemic stablecoins, and she described a "multi-money" system in which conventional deposits, tokenized deposits and regulated stablecoins could coexist and convert at par value.
The pilot’s next phase includes plans to create a company and a supervisory regulation, with UK Finance aiming to establish a dedicated company and develop a rulebook and governance framework to support the transition from pilot to full production. The project’s stakes were framed as a competition over what cash supports tokenized assets, with tokenized deposits remaining liabilities of issuing banks while stablecoins are digital assets issued by private entities and backed by reserves.