According to a recent Bloomberg report, major British banks like Barclays took part in a trial to test tokenized deposits. The trial began this February and involved Mastercard and Visa, the world’s biggest credit card companies. It will likely take some time to utilize this technology commercially, as the experiment is expected to run for up to three years. The first results from the ongoing trial will be revealed in late summer.
Tokenization is gaining traction in the United Kingdom. Last month, a government-backed technology group published a report encouraging local firms to explore this novel technology, potentially boosting efficiency within the banking sector. Before that report, the same group had also requested that regulators introduce clear tokenization rules and guidelines.
British Bank Joins Global Tokenization Initiative
On a broader scale, the Bank for International Settlements (BIS), representing major central banks from around the globe, announced a tokenization project called Agora earlier this month. Agora aims to unite both central and commercial banks through shared infrastructure. The Bank of Japan and the Bank of France are among its early participants. The primary goal of Agora is to address and solve key issues involved with cross-border payments.
However, Agora is not the only project in the 2024 Innovation Hub work program unveiled by the BIS. Another project, dubbed Project Aurum, will focus specifically on privacy aspects related to retail central bank digital currencies (CBDCs). While these innovative initiatives progress, the future of “Britcoin”—the proposed digital pound currency first explored by the Bank of England in 2021—remains uncertain, according to recent reports.
The trial involving major British banks represents a significant step towards tokenized deposits and payments in the UK financial sector. As this multi-year experiment progresses, results could shed light on efficiencies gained and hurdles to overcome. Concurrently, global effortsled by the BIS demonstrate tokenization is a technological avenue actively pursued by commercial and central banks worldwide.
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