Lloyds Banking Group has confirmed a major milestone in its digital asset strategy by completing three live tokenised deposit transactions under Project Agorá. The bank hailed the procedures as an 'important step' in understanding how tokenised deposits could function in real-world payment environments.
Transactions cover multiple currencies and scenarios
The three transactions covered GBP, Swiss franc, euro and cross-currency payment scenarios. In a notable development, the cross-currency transaction demonstrated how foreign exchange (FX) conversion, payment, and settlement can be linked together as part of a single transaction flow, rather than being processed as separate steps.
According to the bank, the transactions tested how tokenised commercial bank deposits can be used in practical payment and settlement scenarios across Swiss francs, euros, and sterling. This exercise was designed to showcase how tokenisation could improve transparency and reduce friction in cross-border payment flows.
Cross-currency transaction details
In the cross-currency transaction, Lloyds' Corporate Markets business converted Swiss francs into sterling, with Lloyds Bank providing the sterling settlement. The FX conversion, payment, and settlement were linked together, meaning the transaction occurred simultaneously, instead of in separate steps.
This is significant because cross-border payments today are typically processed across multiple systems and institutions, with payment, currency conversion, and settlement often handled separately. By linking these stages, tokenisation could support more seamless and efficient cross-border payments, the bank explained.
Participation in additional transactions
Beyond the cross-currency deal, Lloyds also participated as a customer bank in separate Swiss franc and euro transactions using tokenised deposits. Together, the three transactions tested how tokenised commercial bank money could support payment flows across different currencies within the regulated banking system.
Bank's perspective on the milestone
Peter Left, Head of Digital & Markets Innovation at Lloyds Banking Group, said: "Moving from prototypes to live transactions is an important step in understanding how tokenised deposits could work in real payment scenarios. This testing has allowed us to bring together our payments, settlement and foreign exchange capabilities in a cross-currency transaction. It gives us valuable practical insight into how tokenisation could help reduce friction and settlement risk in wholesale payments, while operating within the regulated banking system."
Implications for the banking sector
Project Agorá, an initiative involving multiple central banks and private financial institutions, aims to explore the potential of tokenised deposits and central bank money for improving wholesale payments. Lloyds' participation in live transactions marks a significant step forward from theoretical prototypes, providing concrete evidence of how tokenisation might be applied in practice.
The successful execution of these transactions could pave the way for broader adoption of tokenised deposits in the banking industry, potentially reducing costs and settlement times for cross-border payments. While still in early stages, the results offer optimism for more efficient and transparent financial systems.
