UK’s largest banks complete world’s first interbank transactions using tokenized deposits
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Summary
Seven of the U.K.’s largest banks completed the world’s first customer transactions using tokenized British pound deposits on a shared platform built by Quant. The trial included remortgage payments and a consumer purchase, designed to test whether regulated bank money can move in tokenized form across institutions and support retail payments. Tokenized deposits remain liabilities of the issuing banks and maintain conventional deposit protections.
Why it matters
According to Lucy Rigby, economic secretary to the Treasury, these live transactions demonstrate that tokenized deposits can provide practical benefits, such as contingent payments giving customers greater control over their money. The development has potential to speed up settlement, improve cash-flow management, and offer more convenient, transparent, and secure payment methods for businesses and consumers. Regulators are preparing the financial system for tokenization and extended settlement hours, aiming to support tokenized markets alongside considerations of stablecoins for institutional settlement.
Key context
The shared platform by Quant differs from previous initiatives like Lloyds' use of tokenized deposits within a single institution for tokenized gilt purchases. Tokenized deposits represent digital records of money held in bank accounts, distinct from stablecoins because they are liabilities of the issuing banks and retain deposit protections. The trial follows ongoing regulatory preparations by the Bank of England and Financial Conduct Authority to accommodate tokenization in the U.K.’s financial system.
Key numbers and entities
Participating banks included Barclays, HSBC, Lloyds Banking Group, Monzo, Nationwide, NatWest, and Santander. The platform was developed by Quant, a distributed ledger technology service provider. Lucy Rigby, economic secretary to the Treasury, and Gilbert Verdian, Quant’s founder and CEO, are quoted in the announcement.
What remains unclear
The source does not provide detailed technical specifications of the tokenized deposit platform or specifics on the next phase of testing involving digital asset settlement. It also does not clarify the timeline for wider adoption or regulatory approval for tokenized deposits in everyday banking operations.