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Growing confidence in UK finance

Tokenization is becoming a major theme in the United Kingdom's financial sector, moving beyond pilot projects. In Lloyds Banking Group's annual survey of 100 senior decision-makers, 71% of respondents said they expect the technology to change the structure of financial services. The research covered major banks, insurance companies, asset managers and financial sponsors.

The survey results show that institutions are evaluating blockchain-based infrastructure especially in areas such as payments, settlement and liquidity management. This suggests traditional financial firms no longer see digital asset infrastructure as purely experimental.

What are the biggest gains on payments and liquidity?

According to respondents, the biggest benefit is faster completion of transactions. While 60% of executives said tokenization could speed up payments and settlement processes, 41% expect improvements in collateral and liquidity management.

  • Faster payment and settlement processes
  • More efficient use of collateral and liquidity
  • Capital and cash tied up in transactions could be redeployed elsewhere

Lloyds said moving assets and payments to digital infrastructure could free up some of the capital and liquidity currently locked up during financial transactions. That could allow institutions to shift resources to other business areas.

The bank also carried out a practical test in this area. Lloyds said that this year it completed a transaction on a public blockchain with Archax and Canton Network, using tokenized deposits to buy a tokenized UK government bond.

Regulatory moves aim to expand the market

The research comes as policymakers in the UK are trying to move tokenization beyond pilot projects and make it part of the financial infrastructure. In May, the Bank of England floated an expansion that would make core settlement infrastructure available nearly 24/7.

Economic impact and international coordination

A later public payments plan also called for a payment system in which tokenized forms of money can work alongside traditional currencies. In July, a government-backed industry task force estimated that UK leadership in tokenized finance could add £33 billion a year to the economy by 2035. The same report called for the country's first tokenized government bond to be issued by early 2027.

The UK and the US are also seeking closer cooperation on cross-border use cases. Treasury officials from both countries proposed setting up a group where the private sector would test the international use of tokenized assets, while also calling on US regulators and the Bank of England to define joint regulatory approaches.

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