The UK government has appointed six banks to lead the planned issuance of its first digitally native government bond, with the Digital Gilt Instrument (DIGIT) pilot expected in the first quarter of 2027.
According to HM Treasury’s announcement on October 6, Barclays, HSBC, Lloyds, Morgan Stanley, NatWest, and RBC Capital Markets have been appointed as joint lead managers for the Digital Gilt Instrument (DIGIT) pilot.
The banks will provide underwriting services, support investor engagement, and distribute the bond on issuance day.
DIGIT to Test DLT Bond Issuance
The pilot will examine how distributed ledger technology (DLT) can be used across the issuance and lifecycle of a UK government bond.
DIGIT is designed as a short-dated, digitally native bond that will be issued on a platform operating within the UK’s Digital Securities Sandbox. It will use on-chain settlement and remain separate from the government’s main debt management programme.
The UK has described DIGIT as the first sovereign debt instrument to be issued using digital technology by a G7 government. The project is intended to test whether DLT can support the infrastructure used for government bond issuance while supporting the wider development of tokenized financial markets.
The appointment of the six banks completes the procurement process and allows the government to begin engaging with potential investors ahead of the planned issuance.
Economic Secretary to the Treasury Lucy Rigby said the appointment was an important step toward the government’s planned digital gilt issuance early next year.
HSBC to Supply DLT Infrastructure
The latest development follows the government’s appointment of HSBC as the DLT supplier for DIGIT in February.
The bond is expected to be issued on HSBC’s Orion digital securities depository within the Digital Securities Sandbox. HSBC was authorized in July to provide live digital securities depository services within the sandbox.
HSBC and London Stock Exchange Group (LSEG) also signed a memorandum of understanding in July to develop a bilateral Digital Securities Depository link. The proposed connection is intended to support interoperability between their respective digital securities infrastructures, potentially allowing investors to access and hold DIGIT through either infrastructure.
The government also expects to list DIGIT on the London Stock Exchange’s main market as part of the pilot issuance.
The broader initiative is intended to test whether DLT can be integrated into existing financial-market infrastructure rather than creating a separate system for digital securities.
The UK government said the pilot will also seek to encourage the development of domestic DLT infrastructure and wider adoption of the technology across UK financial markets.
Focus on Digital Settlement
A key challenge for digital government bonds is connecting on-chain securities with cash, custody and existing settlement systems. The Bank of England and Financial Conduct Authority are examining how different forms of money, including tokenized deposits, regulated stablecoins, and central bank money, could support settlement in digital markets.
The Bank of England is also developing a synchronization service to link digital asset ledgers with sterling held in its real-time gross settlement system, with the service targeted for 2028.
The development comes as UK banks are also testing tokenized deposits for real-world transactions. Lloyds, NatWest and Barclays recently completed mortgage-related transactions using tokenized deposits, while HSBC was involved in a separate test linked to an online marketplace payment.
The DIGIT pilot, expected in Q1 2027, will test how a government bond can be issued and settled on digital infrastructure while remaining connected to traditional financial markets. The six banks will now begin investor engagement and preparations for the issuance.
The Bank of England is also assessing whether DIGIT could be eligible as collateral within its Sterling Monetary Framework. If approved, that could connect the digital gilt with existing financial-market funding and collateral infrastructure beyond its initial issuance and settlement functions.
Also Read: 71% of UK Financial Firms Expect Tokenization Shift: Lloyds
