A coalition of major financial institutions, including Barclays and Lloyds Banking Group, is pushing the UK government to speed up the digitalisation of the country’s financial markets. A new report, backed by a 54-member taskforce that also features JP Morgan, argues the move could deliver a £33bn annual boost to the economy.
The paper focuses on tokenisation.
It is the practice of representing asset ownership digitally on a blockchain, a decentralised network of computers. Supporters say trading assets as tokens can increase transaction speed and cut administrative costs by replacing traditional market infrastructure with automated software.
12-month plan to harness tokenisation
Chris Woolward, appointed as the wholesale digital markets champion earlier this year, led the report’s findings.
He outlined a 12-month plan covering nine key areas to adopt the technology.
“Tokenised markets offer a significant opportunity to the UK in terms of efficiency and the potential for innovation and to defend our global position in the established markets,” the document states.
It adds that if “implemented at scale,” tokenisation could free up capital for growth and strengthen Britain’s competitive standing. It estimates the global market for tokenised assets could reach up to $88tn by 2035.
Estimates from Barclays and PwC suggest widespread adoption could generate a substantial boost to economic output and an extra £14bn in tax revenue. Miles Celic, chief executive of TheCityUK, said global competition was “fierce and intensifying,” and called for Britain to be “much faster, more ambitious and more creative” to stay ahead.
Related: Fiji fears Nations Championship shortfall
“There is no automatic right to success,” he added.
The document warns of strong competition from the US.
“A lack of pace would bring fundamental risks to Britain’s influential position as a global leading financial services hub,” it says.
Chris Hayward, policy chairman of the City of London Corporation, said Britain could lead a “digital big bang in financial services” if it accelerates the “adoption of tokenisation.”
The City’s push comes as regulation around digital assets remains a contentious topic. The Bank of England recently watered down the final version of its rules for stablecoins after facing criticism.
Bank governor Andrew Bailey was previously accused of “killing” the country’s stablecoin ambitions with what some called “prescriptive” views.
He also drew fire from Reform UK’s Nigel Farage, who branded him a “dinosaur” for his stance on cryptocurrency.
In its final framework, the Bank ditched plans to impose a limit on customer deposits, instead opting for a temporary cap on the total volume of sterling-denominated tokens in circulation.
