Sterling Deposit Tokenization

Definition ∞ Sterling Deposit Tokenization is the process of converting traditional British Pound sterling deposits held at financial institutions into digital tokens on a distributed ledger. These tokens represent a claim on the underlying fiat currency and can be transferred and settled on a blockchain. This innovation aims to modernize payment and settlement systems.
Context ∞ Sterling Deposit Tokenization is a key area of exploration within the UK financial sector, driven by interest in central bank digital currencies and wholesale settlement efficiency. Discussions often center on its potential to enable instant, programmable payments and reduce counterparty risk. Observing pilot programs and regulatory guidance from UK authorities provides insight into its practical implementation and market impact.