The UK has entered a new phase in the tokenisation of capital markets, with recent government and regulatory actions showing increased momentum. These include guidance on tokenised funds and collateral, the Chancellor's plan for a Digital Gilt Issuance in 2027, and the Bank of England's new secondary objective to support innovation in digital money.
Despite this progress, there is a risk that the market could form elsewhere, particularly in the US, potentially leaving the UK to adapt to external standards. The UK aims to be a global leader in tokenisation, moving beyond proof-of-concept to drive institutional adoption.
Tokenisation could significantly benefit wholesale fixed-income markets by addressing current inefficiencies. Nasdaq data suggests that more efficient collateral mobilisation could reduce collateral requirements by up to 30% in some cases. The UK is well-positioned in this area, accounting for 50% of global OTC interest-rate derivatives turnover and 38% of OTC foreign exchange turnover, according to the BIS Triennial Central Bank Survey 2025.
To achieve leadership, four priorities have been identified: establishing a clear overarching vision, aligning digital money and tokenisation strategies, empowering the Digital Markets Champion with decision-making powers, and concentrating efforts on priority areas such as sovereign debt, money market instruments, repo, collateral management, and FX.