A senior Bank of England official has thrown her weight behind tokenized deposits, predicting the technology will eventually replace stablecoins entirely. Sarah Greene, the central bank’s director of financial stability, said the shift could fundamentally alter how financial stability is managed and push global regulators to rewrite their playbooks for digital currencies.
Why tokenized deposits could win
Tokenized deposits are essentially digital versions of regular bank deposits — a claim on a commercial bank that lives on a shared ledger. Greene argued they offer the same stability as traditional money because they’re backed one-to-one by central bank reserves, unlike stablecoins which rely on a mix of assets and are only as good as their issuer’s solvency.
“Stablecoins carry risks that tokenized deposits don’t,” Greene said during a speech at a fintech conference. “If we can build a system where digital money is just a tokenized version of what already works, we don’t need a workaround.”
The prediction matters because the Bank of England has been cautious about private digital currencies. Greene’s comments signal a preference for bank-issued tokens over the crypto-native stablecoins that have drawn regulatory scrutiny worldwide.
What the shift means for regulators
If tokenized deposits take over, the implications ripple well beyond the UK. Greene noted that a widespread switch would force central banks and financial authorities to rethink how they oversee payment systems and manage runs on money. Today, stablecoins fall into a regulatory gray area — they’re not quite bank deposits, not quite securities. Tokenized deposits, by contrast, would sit squarely inside the existing banking framework.
“You’d have the same protections, the same oversight, the same deposit insurance,” Greene said. “That makes it easier for regulators to ensure stability without inventing entirely new rules.”
But the transition won’t be seamless. Banks would need to upgrade their core infrastructure to issue digital deposits that can move freely across blockchains. And central banks would have to decide whether to allow tokenized deposits to settle payments in real time — a shift that could test existing settlement systems.
The unresolved question
Greene didn’t put a timeline on the prediction, and the Bank of England hasn’t announced any formal plan to phase out stablecoins. The real test will come as the central bank moves ahead with its digital pound consultation, which is expected to outline how tokenized bank deposits fit alongside a potential central bank digital currency.
For now, stablecoin issuers continue to operate under provisional rules. But Greene’s remarks suggest the Bank of England sees tokenized deposits as the more durable option — and that global regulators, watching the UK’s lead, may start tilting the same way.
