Banks explore tokenized deposits as digital cash race grows
Banks are stepping up work on tokenized deposits as they look for ways to bring traditional money onto blockchain-based systems, according to a new industry report.
Tokenized deposits are digital versions of bank deposits that run on blockchain networks. Unlike many stablecoins, they are issued by banks and remain part of the existing financial system, including rules on safety, capital, and identity checks.
Major banks and industry groups say these assets are becoming part of a broader mix of digital money, alongside stablecoins and central bank digital currencies.
UK Finance said tokenized deposits could play a “vital role” in a future system where different forms of money exist side by side. The group said they would work alongside both private and public digital currencies.
Several pilot projects are already underway in Europe, as banks test how tokenized deposits can be used for payments, settlements, and other financial services.
The push reflects growing competition in digital cash, as banks try to keep their role in payments and deposits while new blockchain-based options continue to expand.
Featured image from: cointelegraph.com