From Tokenised Deposits to Banking Infrastructure

On 24 September, UK Finance announced that the Great British Tokenised Deposit initiative, or GBTD, had completed the first live customer transactions using tokenised sterling deposits. Participants include Barclays, HSBC UK, Lloyds Banking Group, Monzo, Nationwide, NatWest and Santander. The initial transactions covered two remortgage completions and a consumer marketplace payment. In these cases, funds could be locked in advance and released automatically once agreed conditions were met. The initiative operates on common infrastructure built by Quant, and UK Finance described the transactions as the first demonstration by leading UK banks that tokenised deposits can move between institutions on a shared, interoperable infrastructure. Digital-asset settlement will be tested in the next phase. This moves tokenised deposits into a new stage. Banks have already demonstrated the ability to issue programmable deposits. The next questions concern interoperability across institutions and whether this form of money can become part of digital-asset settlement.

From Individual Banks to a Common Network

Commercial-bank money already operates as a multi-issuer system. Deposits issued by Barclays, NatWest or another bank are liabilities of different institutions, yet the existing payments system allows them to move at par across the banking network. Tokenisation needs to preserve this monetary coherence. Separate tokens, ledgers and operating rules at each bank could otherwise create a collection of isolated digital networks. Programmability at an individual institution would have limited value if the wider banking system remained fragmented. Interoperability therefore becomes a central condition for the development of tokenised deposits. GBTD is testing precisely this layer. Banks retain their own commercial-bank liabilities while giving those liabilities programmable functionality on common infrastructure. Existing bank money can begin to operate in a programmable environment without requiring customer funds to be converted into a single privately issued digital currency.

The Bank of England has been developing its vision for future payments along similar lines. Its framework envisages a multi-money system in which traditional bank deposits, tokenised deposits, regulated stablecoins and potentially other forms of digital money can coexist. These forms of money need to remain freely exchangeable at par in order to preserve the singleness of money. Within that framework, GBTD provides practical evidence that the digitalisation of commercial-bank money can begin to move beyond the boundaries of individual institutions.

The Cash Leg Enters Programmable Infrastructure

This capability has particular significance for tokenised capital markets. Bonds, funds, securities and other financial assets have increasingly moved onto tokenised infrastructure. Once the asset side of a transaction becomes digital, however, the transaction still requires money for settlement. When a security moves through DLT infrastructure while cash continues to travel through conventional payment systems, the transaction lifecycle remains divided across different infrastructures. Tokenised markets therefore face a fundamental question: what form of money should provide the cash leg? Commercial-bank deposits already serve as one of the principal forms of money used by companies and financial institutions. If tokenised deposits can operate across banks and connect with digital assets through conditional settlement, the movement of cash and assets can begin to take place within the same programmable transaction flow.

GBTD plans to test digital-asset settlement in its next phase, making this the most important part of the initiative to watch. The remortgage and marketplace transactions completed so far are limited in scale, but they establish a prerequisite: deposits issued by different banks can share programmable functionality. If this mechanism can later extend into securities settlement, tokenised deposits could gradually provide the commercial-bank-money cash leg for tokenised markets. Their role would then extend beyond payment functionality and into market infrastructure.

The Existing Monetary System Is Becoming Digital in Layers

Recent developments in Europe and the UK together reveal a broader structure. On 21 September, the Eurosystem launched Pontes, enabling wholesale tokenised asset transactions to settle in central-bank money through TARGET Services. A few days later, major UK commercial banks completed the first live customer transactions using interoperable tokenised deposits. The two initiatives operate at different layers. Pontes addresses the role of central-bank money as the settlement anchor for tokenised markets. GBTD explores how commercial-bank money can acquire programmable functionality across institutions. Together, they suggest that digital finance is progressing through the existing two-tier monetary system layer by layer.

Central-bank money continues to provide final settlement and the monetary anchor. Commercial-bank money continues to perform most of the deposit-money functions used by businesses and households. The connection between these forms of money and digital assets is now changing. This helps explain why the future digital-money architecture may remain structurally diverse. Stablecoins, tokenised deposits and central-bank money can perform different functions within the same financial system. Interoperability, settlement certainty, regulatory treatment and institutional usage will determine how those forms of money interact.

From Bank Product to Banking Infrastructure

GBTD remains a pilot. It has yet to demonstrate the liquidity, operational resilience or economic viability of tokenised deposits at market scale. Industry standards, commercial models and the eventual settlement architecture are still developing, while digital-asset settlement remains part of the next phase. The current transactions are best understood as an infrastructure milestone. The first stage of tokenised deposits established that banks could issue and use programmable deposits. GBTD begins to address the next question: whether commercial-bank money issued by different institutions can operate continuously on shared infrastructure. If that capability can expand across more banks, markets and asset classes, tokenised deposits will acquire a broader role. Commercial-bank money will begin to take on the characteristics of programmable market infrastructure. That is the development in the UK experiment worth recording.

References

• UK Finance, “UK banks complete first live customer transactions using tokenised sterling deposits”, 24 September 2026.
• UK Finance, “Tokenised sterling deposits: Delivering tokenised sterling deposits, the Great British Tokenised Deposit initiative”, September 2026.
• Bank of England, Sarah Breeden, “Talking ’bout next generation”, 2 February 2026.
• Bank of England, Sarah Breeden, “Modernising money and markets”, 19 May 2026.
• European Central Bank, “Eurosystem brings central bank money to tokenised finance”, 21 September 2026.
• European Central Bank, “Pontes”, initial launch 21 September 2026.