UK Finance and a consortium of Britain’s largest banks have launched a new pilot project to test the first UK live transactions of tokenised sterling deposits (GBTD).

Tokenised deposits are a digital representation of traditional sterling commercial bank money.

These deposits are designed to retain the trust and regulatory protections of conventional deposits, while offering benefits such as enhanced speed and fraud protection.

The initiative, which is being led by the financial services trade association in collaboration with Barclays, HSBC, Lloyds Banking Group, NatWest, Nationwide and Santander, will run until mid-2026.

The pilot will deliver tokenised deposits and programmable payments against three use cases: person-to-person payments via online marketplaces, remortgaging processes, and digital asset settlement.

The trial aims to demonstrate the tangible benefits of tokenised deposits, including giving users greater control over their payments, stronger fraud prevention, and more efficient settlement processes.

The platform will be fully interoperability between new forms of digital money, payment systems and institutions.

It also offers tokenisation-as-a-service, ensuring that organisations without their own tokenised deposit capabilities can participate.

Quant has been chosen to deliver the infrastructure behind the GBTD.

EY and Linklaters will also be collaborating on the project.

"This project is a powerful example of industry collaboration to deliver next generation payments for the benefit of customers and businesses - and an opportunity for the UK to lead globally in setting standards for tokenised money," said Jana Mackintosh, managing director, UK Finance. "Andrew Bailey, governor of the Bank of England, recently called for innovation in how digital technology is applied to the money we use today.

"That’s exactly what tokenised deposits represent: a secure, regulated evolution of the payments landscape."

Ryan Hayward, head of digital assets at Barclays said that the upgrading of bank deposits to a digital form will help to ensure that commercial bank money "remains central to the economy".

"Money and payments are changing rapidly, we need to be part of that debate to ensure we can meet the evolving needs of not only our customers of today, but our customers of tomorrow," said Lee McNabb, payments and digital assets lead, NatWest Group. "We feel Tokenised deposits are a great opportunity for the UK, bringing added functionality mixed with security of existing commercial bank money."

HSBC's group head of digital assets & currencies John O'Neil agreed that tokenised deposits are an "important development in digital money."

The move comes after HSBC announced the launch of a new cross-border tokenised deposit service earlier this week.

The service is part of an expansion of the bank’s existing Tokenised Deposit Service (TDS), a blockchain-based solution that allows corporate clients to move currencies in real-time with instant 24/7 settlement.

Using HSBC’s Distributed Ledger Technology (DLT), traditional fiat deposits are represented by digital tokens, allowing cash movements to be customised and executed instantly from clients’ own systems.

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