Do not follow the stablecoin, the UK banking industry is focusing on the new track of "tokenized deposits".

Several of the largest banks in the UK are steadily moving forward with plans to launch tokenized versions of customer deposits next year. Previously, Governor of the Bank of England Bailey had called for prioritizing the development of deposit tokenization technology over stablecoins. It is understood that tokenization typically involves converting assets such as deposits, stocks, bonds, etc. into digital form and storing them on the blockchain. Supporters say this technology can make transactions faster, cheaper, and more secure. UK Finance, a financial industry organization, revealed on Friday that several banks including HSBC, NatWest, and Lloyds have launched pilot projects to use tokenized deposits for payments in online markets. Bailey is skeptical of stablecoins Before this pilot launch, Bailey had stated in July that he "is not against stablecoins," but has always been unable to understand the necessity of stablecoins and believes that tokenization technology can create more value. Stablecoins, as a type of cryptocurrency pegged to fiat currencies, have become popular in recent years. The "GENIUS Act" proposed by President Trump in the US has brought a clearer regulatory framework to the stablecoin field, prompting several Bank of America Corp to consider entering the stablecoin market currently dominated by non-bank institutions. Just this Thursday, a group of European banks also announced plans to launch Euro-denominated stablecoins. Bailey has repeatedly warned that stablecoins could draw funds away from the banking system and potentially threaten financial stability. In an interview in July, he specifically warned that banks should not issue their own stablecoins. Although the Financial Conduct Authority (FCA) in the UK is not expected to finalize stablecoin regulatory rules until the end of 2026, the Bank of England has made it clear that banks can conduct experiments with deposit tokenization within the existing regulatory framework. A senior executive in the UK banking industry pointed out that while tokenized deposits lack the brand recognition of stablecoins, they are still an important technological upgrade. In fact, many large banks are currently researching both technologies simultaneously. The CEO of Citigroup stated in July that the importance of tokenized deposits may be higher than stablecoins. Manish Kohli, Head of Global Payments Solutions at HSBC, said that tokenized deposits have not fully realized their potential in the past, with the key issue being the inability for tokenized deposits between different Financial Institutions to interact; and this new pilot project effectively solves this key problem. Kohli revealed that although the current pilot project primarily focuses on domestic applications, the technological potential of tokenized deposits is vast in cross-border transactions. "We see strong demand from many customers in this area," he added. This tokenization pilot in the UK has also attracted participation from Barclays, Nationwide, and Santander, and will continue until mid-2026. In addition to payment scenarios, the pilot will also test the application of tokenized deposits in mortgage processes and digital asset settlements. Jana Mackintosh, Managing Director of Payment and Innovation at UK Finance, stated that tokenization technology allows banks to innovate while ensuring that payment activities always remain within the regulated banking system, achieving a balance between innovation and risk control.