UK Banks Push Ahead With Tokenised Deposits Despite BoE Stablecoin Concerns

Major banks in the United Kingdom are moving forward with plans to introduce tokenised deposits, even after the Bank of England (BoE) issued a warning over the risks associated with stablecoins.

The lenders argue that tokenised deposits — digital representations of traditional money — could improve efficiency, reduce settlement times, and strengthen the country’s financial infrastructure. Unlike stablecoins, which are typically issued by private firms and backed by reserves, tokenised deposits would remain directly tied to the banking system.

The BoE recently cautioned that stablecoins may not offer the same stability and protections as traditional bank money, raising concerns about potential risks to financial stability. However, banks stress that their tokenised models are distinct, designed to align with existing regulations and safeguard consumers.

Industry observers say the move highlights how financial institutions are exploring digital innovations while navigating regulatory uncertainties. The debate is expected to intensify as the UK advances its wider digital finance strategy.