Lloyds completes live tokenised deposit tests in Agorá

Lloyds Banking Group has completed three live tokenised deposit transactions through Project Agorá, covering sterling, euros, Swiss francs and a cross-currency payment flow.

The transactions were part of the real-value testing phase of Project Agorá, an international initiative examining whether tokenisation can be used in wholesale cross-border payments. Convened by the Bank for International Settlements and the Institute of International Finance, the project includes eight central banks and more than 40 private-sector financial institutions.

The three transactions were designed to test how tokenised commercial bank deposits could be used in payment and settlement scenarios within the regulated banking system. Two involved Swiss franc and euro payment activity, with Lloyds acting as a customer bank.

The third linked foreign exchange conversion, payment and settlement in a single flow. In that test, the group's Corporate Markets business converted Swiss francs into sterling, while Lloyds Bank provided sterling settlement.

This differs from many existing cross-border payment arrangements, in which payment, currency conversion and settlement are handled separately across several systems and institutions. By combining those stages, the transaction tested whether tokenisation could reduce the number of steps needed to complete a cross-border transfer.

Cross-currency test

The cross-currency transaction took place simultaneously rather than through a sequence of disconnected processes. In wholesale markets, that approach is often described as atomic settlement, where all parts of a transaction complete together or none do.

Project Agorá has been exploring whether tokenised central bank reserves and tokenised commercial bank deposits could operate together on a shared programmable platform. The broader effort is focused on cross-border wholesale payments, where banks and policymakers have long looked for ways to cut delays, improve visibility and reduce settlement risk.

Lloyds has been expanding its involvement in digital asset and tokenisation tests in regulated markets. Earlier, it said it had completed the UK's first public blockchain transaction using tokenised deposits.

It also worked with Aberdeen Investments and Archax on a transaction involving tokenised money market fund units and tokenised UK gilts as collateral for foreign exchange trades. That formed part of a wider push by large banks to test how existing financial instruments and bank money might move on distributed ledger-based systems.

The latest tests add live transaction experience to a field often dominated by pilot projects and technical demonstrations. Financial institutions have been under pressure to show that tokenisation can work in practical settings with real value at stake, rather than only in controlled simulations.

Industry effort

For banks, a central question is whether tokenised forms of commercial bank money can fit within current regulated structures while making settlement more direct. Wholesale cross-border payments remain a key area because transactions often pass through multiple intermediaries and operate across separate domestic infrastructures.

The involvement of central banks and large private institutions in Project Agorá reflects the level of official interest in that question. According to details released by the organisers, the project's prototype has already shown that cross-border atomic settlement is technically possible across currencies and jurisdictions.

Lloyds described its role in the exercise as part of an ongoing assessment of how tokenised deposits might be used beyond proof-of-concept work. Its participation in three transaction scenarios gave it exposure to both same-currency and cross-currency activity.

"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," said Peter Left, Head of Digital & Markets Innovation at Lloyds Banking Group.