Bank of England's Greene Calls for Tokenised Deposits Over Stablecoins
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Fazen Markets Editorial Desk
Collective editorial team · methodology
bank-of-englandstablecoins
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Bank of England policymaker Katherine Greene stated that tokenised versions of commercial bank deposits should serve as the foundation for future digital payments, potentially displacing privately issued stablecoins-amplify-us-monetary-policy-reach" title="Fed's Waller Says Stablecoins Amplify US Monetary Policy Reach">stablecoins. Greene delivered the remarks at the London Fintech Summit on 31 May 2026. The comments represent a significant intervention from a major central bank, explicitly framing tokenised deposits—essentially digital claims on regulated commercial banks—as a safer alternative to existing crypto-based stablecoins. The speech directly addresses the systemic financial stability concerns that have historically plagued the $160 billion stablecoin sector.
The call for tokenised deposit frameworks follows a decade of volatile growth in private stablecoins. The collapse of TerraUSD in May 2022 erased over $40 billion in market value in days and triggered a wider crypto credit crisis. Regulatory scrutiny intensified globally, with the EU's Markets in Crypto-Assets (MiCA) regulation imposing strict rules on stablecoin issuers starting in June 2023. The current macro backdrop shows interest rates at 5.25% in the UK as the BoE focuses on financial system resilience.
Greene’s statement is a catalyst, shifting the debate from whether to regulate stablecoins to proposing a wholesale replacement with a bank-centric model. This aligns with ongoing work by the Bank for International Settlements (BIS) on tokenised commercial bank money under Project Agorá. The trigger is the perceived failure of pure algorithmic models and persistent concerns over the asset backing and redemption risks of large private issuers like Tether and Circle.
The private stablecoin market totals approximately $160 billion as of late May 2026. Tether's USDT dominates with a 69% market share, representing $110.4 billion in circulating supply. Circle’s USDC holds a 22% share, equating to $35.2 billion. These figures highlight the concentrated nature of the current system that central bankers aim to reshape.
| Metric | Private Stablecoins (e.g., USDT) | Proposed Tokenised Deposits |
|---|---|---|
| Issuer | Private Crypto Entity | Regulated Commercial Bank |
| Primary Backing | Mix of reserves (commercial paper, Treasuries) | Bank deposits (covered by deposit insurance) |
| Regulatory Oversight | Evolving (e.g., MiCA) | Existing Prudential Framework (e.g., BoE/PRA) |
In comparison, global demand deposit accounts, the potential base for tokenisation, exceed $50 trillion. The UK's 10-year gilt yield traded at 4.12% on the day of the speech, reflecting broader market conditions.
Major UK retail banks with strong digital infrastructure stand to gain strategic advantage. HSBC (HSBA.L) and Barclays (BARC.L) could see their deposit bases become more 'sticky' and valuable as the foundation for new payment rails. Conversely, pure-play stablecoin issuers and their associated ecosystems face headwinds. Crypto exchange Coinbase (COIN), a major distributor of USDC, may face margin pressure if demand shifts toward bank-issued tokens.
The primary risk is execution. Tokenised deposit systems require flawless, real-time interbank settlement and could initially fragment liquidity across proprietary bank platforms. Acknowledging this, Greene noted the need for common standards to ensure interoperability, a hurdle that has stalled similar initiatives in the past.
Market positioning shows institutional investors are likely to reduce exposure to decentralised finance (DeFi) protocols overly reliant on private stablecoins. Capital flow is shifting toward regulated financial technology firms and infrastructure providers enabling bank tokenisation, such as Fiserv (FI) and Fidelity National Information Services (FIS).
The next major catalyst is the publication of the Bank of England's Discussion Paper on the Future of Money, expected in Q3 2026. This document will formalize the Bank's stance and likely propose a regulatory sandbox for tokenised deposit pilots. The European Central Bank's decision on the digital euro prototype, expected by year-end 2026, will also influence the broader regulatory direction.
Key levels to monitor include the aggregate stablecoin market cap; a sustained drop below $150 billion would signal market acceptance of Greene's thesis. Watch the share prices of major UK banks for breakout moves above their 200-day moving averages on related news.
Tokenised bank deposits are digital tokens on a distributed ledger that represent a direct claim on a regulated commercial bank, just like a traditional deposit. They differ from stablecoins, which are claims on a private entity's reserve assets. Tokenised deposits would be inherently covered by existing national deposit insurance schemes up to applicable limits, offering a familiar safety net that stablecoins lack.
For retail investors, this development increases regulatory uncertainty around major stablecoins like USDT and USDC. While not an immediate threat, a long-term shift toward bank-issued tokens could diminish the utility and demand for private stablecoins within crypto exchanges and DeFi. Investors should monitor the liquidity and peg stability of their stablecoin holdings more closely as policy evolves.
While no major economy has fully deployed a system of tokenised commercial bank deposits, several pilots provide precedent. In 2024, the Monetary Authority of Singapore's Project Guardian facilitated cross-border transactions using tokenised Japanese Yen and Singapore Dollar deposits. The Swiss National Bank's Project Helvetia III, concluded in 2024, also successfully settled bond trades with tokenised commercial bank money on a distributed ledger.
A BoE policymaker has framed tokenised bank deposits as the preferred, regulated successor to privately issued stablecoins.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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