**UK Banks Launch Live Pilot for Tokenized Sterling Deposits, Advancing Financial System Modernization**
UK banks are embarking on a live pilot phase for tokenized sterling deposits, marking a significant step toward modernizing the core infrastructure of the United Kingdom’s financial system through distributed ledger technology (DLT).
According to a press release dated September 26, UK Finance is leading this initiative with participation from major banks including Barclays, HSBC, Lloyds Banking Group, NatWest, Nationwide, and Santander. The project, running through mid-2026, aims to facilitate live transactions using tokenized sterling deposits.
### Pilot Focus and Objectives
The pilot will specifically test practical applications such as online marketplace payments, remortgaging, and digital asset settlement. Key goals include enhancing transaction speed and reducing fraud, thereby highlighting tangible benefits of tokenized deposits in everyday financial activities.
### Building on the Regulated Liability Network
This new pilot builds directly on the foundation established by the Regulated Liability Network (RLN), a multi-phase initiative exploring how tokenization can be applied to money circulating within the regulated financial system.
Previous RLN trials demonstrated that commercial bank deposits can be transformed into digital tokens without compromising the trust and protections fundamental to the banking sector. Transitioning into a live transaction phase allows UK Finance and its member banks to rigorously test this model at scale and across various real-world use cases.
### Guidance and Support from the Bank of England
The Bank of England has played a discreet yet influential role in shaping this direction. Governor Andrew Bailey recently encouraged banks to prioritize tokenized deposits over issuing proprietary stablecoins, citing tokenized deposits as a more stable and regulated pathway for modernizing money.
### Interoperability and Inclusive Access
A critical technical feature of the pilot platform is its full interoperability. As stated in the press release, the platform is being developed to seamlessly integrate with other emerging digital money and payment systems. This includes tokenized deposits, potential future central bank digital currencies (CBDCs), and projects like the planned digital gilt (DIGIT).
Furthermore, the pilot offers tokenization-as-a-service, enabling institutions without in-house capabilities to develop their own digital deposit systems to participate. This approach broadens access and helps establish an inclusive framework for digital payments across the UK financial landscape.
—
This live pilot phase represents a pivotal milestone in the UK’s journey toward a more efficient, secure, and technologically advanced financial system. By leveraging tokenization and distributed ledger technology, UK banks are setting the stage for innovative payment solutions that promise to benefit consumers, businesses, and the economy as a whole.
https://crypto.news/uk-banks-forge-digital-sterling-in-landmark-tokenization-pilot/