A consortium of heritage financial institutions has announced the formation of a tokenised deposit network intended to enable real-time transfer of digital representations of funds held at those institutions, across a distributed ledger maintained by those institutions. The network will be operated by a legacy settlement utility co-owned by the same institutions that formed the consortium. A launch is anticipated for the first half of next year, subject to the completion of a technical design phase currently in planning.
A New Form of Money That Is Legally Distinct From Other New Forms of Money
Under the proposed framework, deposits at participating institutions will be tokenised, transferred across the network, and settled in real time using infrastructure that consortium members described as meaningfully different from existing digital currency arrangements. A sentence-release officer from the Department of Optics confirmed that the product "should not be confused with stablecoins, which are a separate concept involving the digital representation of fiat value on a distributed ledger operated outside the governance of the institutions whose fiat value is being represented."
"We are not building a stablecoin. We are building something that will eventually do what a stablecoin does, but under a governance framework that we control, with oversight from a committee that we also control, reporting to a board on which we are represented."
The announcement follows several years of institutional commentary in which participants in the consortium described decentralised digital currencies as speculative, unsuitable for mainstream financial use, and lacking the governance structures necessary for adoption by serious financial institutions. A number of those same institutions have since applied for licences to offer digital asset custody and issuance services. The number of such applications, according to a trade body that tracks these things, is "more than a dozen but fewer than what you would call a lot." The trade body declined to be more specific, citing the dynamic nature of the regulatory environment.
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Contributor guidelines ›Governance Structure Enters Planning Phase
A preparatory working group has been established to oversee the formation of a steering committee. The steering committee will be responsible for constituting the technical governance body, which will in turn guide the design working group through the architecture phase ahead of the pilot. A pilot date has not been set. A date for setting the pilot date is under discussion within the preparatory working group. One industry observer described the governance structure as "appropriately cautious," adding that they had not read the full documentation.
"Our members have consistently held the view that new forms of digital money require careful oversight, appropriate governance structures, and meaningful involvement from the institutions that currently hold everyone's money. This initiative reflects all three of those principles."
The initiative has been welcomed by the settlement utility's communications team. Participating institutions confirmed that the tokenised deposit network will be designed to be interoperable with existing payment rails, subject to further technical consultation. No existing payment rails were retired in connection with the announcement.