UK Banks to Launch Tokenized Deposits in Response to Central Bank's Call

According to PANews, several major UK lending institutions are advancing plans to introduce tokenized versions of customer deposits next year. This move comes in response to a call from the Bank of England's Governor, Andrew Bailey, who advocated prioritizing tokenization technology over stablecoins. The UK Finance Association revealed on Friday that banks such as HSBC, NatWest, and Lloyds have initiated pilot projects to facilitate payments using tokenized deposits through online marketplaces. The trial also involves Barclays, Nationwide Building Society, and Santander, and is expected to continue until mid-2026. Additionally, the pilot will explore the application of tokenized deposits in mortgage transfer processes and digital asset settlements. Despite the Financial Conduct Authority (FCA) anticipating the finalization of stablecoin regulatory rules by the end of 2026, the Bank of England has clarified that banks can conduct tokenized deposit experiments within the existing regulatory framework. Currently, several large banks are simultaneously exploring both tokenized deposits and stablecoins. In July, Citigroup's CEO remarked that the significance of tokenized deposits might surpass that of stablecoins.