UK names six banks for first digital government bond

The UK has appointed Barclays, HSBC, Lloyds, Morgan Stanley, NatWest and RBC Capital Markets as joint lead managers for its first digital-native government bond.

Economic Secretary to the Treasury Lucy Rigby announced the appointments Tuesday during a keynote address at UK Digital Assets Week. The banks were selected through a competitive procurement process and will provide underwriting, investor engagement and distribution services for the Digital Gilt Instrument, known as DIGIT.

DIGIT will be issued on a platform operating within the UK’s Digital Securities Sandbox, a regulatory testing environment for new financial market infrastructure. The pilot will test distributed ledger technology across the bond’s issuance and lifecycle, including onchain settlement.

The Treasury said the project will examine how distributed ledger technology can be used in sovereign debt markets and support the development of digital financial infrastructure in the UK.

In an X post, Rigby described the appointments as an important stage in plans to issue the digital gilt early next year. She called DIGIT “a practical test of new financial market infrastructure.”

The pilot will need to connect digital securities with existing systems for cash payments, custody and settlement. Richard Baker, chief executive of Tokenovate and a member of HM Treasury’s Wholesale Digital Markets Industry Taskforce, said onchain settlement would need to work with those systems from the beginning.

Baker identified common standards and legal certainty as requirements for keeping bond lifecycle events consistent across different systems. He added that connecting the systems could test whether tokenization improves liquidity and market efficiency without creating separate digital networks.

Marius Jurgilas, chief executive of Axiology and a former central banker, described the project as a test of infrastructure for issuance, distribution, trading and settlement. He said that linking those functions through regulated infrastructure could broaden the investor base and create additional funding options.

HSBC was appointed in February as the pilot’s distributed ledger technology supplier. In July, HSBC and the London Stock Exchange Group agreed to develop a link between HSBC’s digital securities platform and the exchange group’s digital securities depository.