UK Finance has launched the first live pilot for tokenised sterling deposits (GBTD) in what could prove to be a watershed moment for companies and their corporate treasurers grappling with the shift towards digital money.
Backed by Barclays, HSBC, Lloyds, NatWest, Nationwide and Santander, and supported by Quant, EY and Linklaters, the programme will run until mid-2026 and test tokenised commercial bank deposits across three live use cases: marketplace payments, mortgage refinancing and digital asset settlement.
Such deposits are digital representations of traditional commercial bank money, offering all the regulatory protections and trust of conventional deposits but with the programmability and speed that distributed ledger technology enables.
Tokenised deposits represent a secure, regulated evolution of the payments landscape
Naresh Aggarwal, policy and technical associate director at the ACT, said that interest in digital assets ecosystem had increased significantly over the summer with many treasurers reporting queries from the C-suite asking for more information. “Whilst treasurers remain sensibly cautious over adopting new solutions and technologies, there is no doubt that tokenised deposits, stablecoins and DLT are becoming terms that treasurers will increasingly need to be familiar with,” he said.
Tokenised deposits promise to compress settlement times, reduce exposure to settlement and counterparty risk, while delivering real-time visibility of cash positions. They could also open the door to automated, conditional payment structures, sometimes referred to as “programmable money”, which would enable treasury teams to link payment flows directly to supply chain milestones or contractual obligations.
Jana Mackintosh, managing director at UK Finance, said: “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. Tokenised deposits represent a secure, regulated evolution of the payments landscape.”
The distinction between tokenised deposits and privately issued stablecoins will be of interest to treasurers. Stablecoins are gaining traction globally but raise questions around issuer credit risk, regulation and convertibility. By contrast, tokenised deposits are issued by commercial banks, anchored in the existing financial system. This provides treasurers with a familiar and safer entry point into digital money, potentially a key step towards adopting more advanced forms of digital finance without taking on additional balance sheet risk.
By enabling live transactions with tokenised sterling deposits, the industry is harnessing technology to enhance trust, security and efficiency across critical payment and settlement workflows
Richard Hay, global co-head of fintech at Linklaters, stressed the regulatory underpinning: “This pilot is a significant step forward in the evolution of digital money in the UK. By enabling live transactions with tokenised sterling deposits, the industry is harnessing technology to enhance trust, security and efficiency across critical payment and settlement workflows. The collaboration reflects not only the strength of the UK’s financial sector but also its determination to lead in setting standards for safe, practical adoption of tokenisation and digital payments.”
Mike Zehetmayr, UK financial services partner at EY, said the pilot is about building confidence and scale: “The next generation of financial technology brings both huge opportunities and potential challenges. This industry-wide pilot is an important step in supporting the necessary infrastructure behind innovative digital payments leveraging tokenised deposits so they can be used more confidently and flexibly on a larger scale. The delivery of live transactions will help the financial industry as a collective and guide the safe and successful implementation of sterling tokenised deposits to bring value to customers, businesses and the wider UK economy.”
UK Finance said that this project forms an important part of the UK’s efforts to deliver next-generation money and payments via GBTD, by applying new digital technologies to the form of money most widely used by consumers and businesses today. It will also enable UK commercial bank money to support government ambitions for growth and innovation, like the current plans for a digital gilt (DIGIT) and the National Payments Vision (NPV).
UK Finance will host engagements and events throughout the pilot to provide all stakeholders with updates on the work and next steps and encourage stakeholders to express their interest in the work here.
More details about the project can be found here.
About the author
Philip Smith is editor of The Treasurer