UK Banks Complete First Tokenised Deposit Transfer as BoE Backs Bank Tokens
UK lenders have carried out a first interbank transfer using tokenised deposits, a route the Bank of England appears to prefer over stablecoins.
A group of UK banks has completed what is being reported as the first interbank transfer of tokenised deposits, marking an early practical step in moving commercial bank money onto distributed ledger infrastructure.
The test sits alongside the Bank of England's stated preference for tokenised bank deposits over stablecoins as a settlement asset for digital markets. Under that approach, the tokens represent claims on regulated banks rather than on a separate non-bank issuer, keeping the activity inside the existing banking perimeter.
Why banks are choosing deposits
- Tokenised deposits are issued by licensed banks, so the liability stays on a regulated balance sheet.
- They are designed for wholesale and interbank settlement rather than retail speculation.
- Stablecoins, by contrast, depend on a non-bank issuer's reserves and redemption arrangements, a structure regulators have scrutinised closely.
The reported transfer is one of several wholesale digital money experiments underway in the UK, where authorities have been weighing how tokenised settlement can coexist with existing payment systems. The report did not name the participating lenders or set out the size and timing of the transaction.
For now the work remains at pilot stage. How quickly tokenised deposits move from trials into routine interbank use will depend on regulatory sign-off, common technical standards and whether enough banks adopt the same rails.