The UK’s leading banks are launching a pilot initiative aimed at facilitating the first live transactions of tokenized sterling deposits (GBTD).
These tokenized deposits serve as a digital representation of traditional sterling commercial bank money, retaining the inherent trust and regulatory safeguards associated with conventional deposits. They offer distinct advantages, such as faster transactions and enhanced protection against fraud.
This pilot is part of the Regulated Liability Network, which serves as a collaborative platform for innovation across various types of currency, including existing commercial bank deposits and a shared ledger for tokenized deposits.
Scheduled to run until mid-next year, this initiative involves prominent banks like Barclays, HSBC, Lloyds Banking Group, NatWest, Nationwide, and Santander, who are working alongside Quant, EY, and Linklaters. The pilot will introduce tokenized deposits and programmable payments for three key use cases:
- Person-to-person payments via online marketplaces: Aiming to reduce fraud and boost confidence among buyers and sellers.
- Remortgaging processes: Enhancing transparency, expediting transactions, and reducing the risk of conveyancing fraud.
- Digital asset settlement: Facilitating the connection of tokenized customer funds with digital assets for seamless transactions.
Ryan Hayward, Head of Digital Assets at Barclays, remarked, "Transitioning bank deposits to a digital format will help ensure that commercial bank money remains integral to the economy, allowing customers to continue benefiting from associated protections and trust."
Paul Horlock, Chief Payments Officer at Santander UK, noted, "Introducing ‘smart money’ to retail consumers enhances confidence, security, and flexibility, aligning with our vision for a multi-currency future and the aspirations set forth in the UK’s National Payments Vision."