This is unlikely to be defined by one dominant form of digital money. Instead, the market is evolving toward a plural and interoperable ecosystem, in which different forms of digital money may serve different functions across payments, liquidity, settlement, treasury and market access.

The key question is no longer whether digital money will play a role, but which forms of digital money will be used, by whom, and for what purpose.

Tokenised deposits, stablecoins, and CBDCs are legally, economically, and operationally distinct. CBDCs represent direct claims on central banks akin to digital cash, tokenised deposits are claims on commercial banks, and stablecoins involve claims on issuers backed by assets, often with complex reserve and legal structures. Each type raises unique considerations regarding credit risk, reserve management, redemption, programmability, trust, and settlement finality.

Rather than the next phase being competition between traditional financial institutions and digitally native platforms, the market appears to be moving towards co-existence, with convergence and strategic collaboration. 

Whilst banks are increasingly exploring blockchain rails and tokenised cash models, digitally native platforms are expanding into products and services that increasingly resemble full-service financial institutions. The more important commercial question may be who captures the customer relationship and transaction flow. 

One of the themes from the discussion was that banks may increasingly face the risk of deposit migration as stablecoins and other digital money instruments gain traction.

The panel’s view was that the stronger response is likely to be proactive participation, not just resistance. That may include digital asset custody, tokenisation capability, stablecoin infrastructure, blockchain-enabled payment products and bank-led issuance or partnership models.

In other words, institutions may need to think not only about protecting deposits, but about remaining relevant within the new flow of money.

A key takeaway was that the success of digital money will depend less on isolated issuance models and more on how effectively new systems connect to existing financial market infrastructure.

The panel emphasised that legacy payment systems are not disappearing overnight. Digital money solutions must work with existing payment rails, compliance systems and settlement infrastructure. Institutions need end-to-end models that can support flows between traditional fiat rails and blockchain-based rails.

This is not therefore just a technology challenge, it is a governance, operating model and infrastructure challenge

Adoption is not simply about whether the technology works. It hinges on senior institutional commitment beyond technical or compliance teams. Successful integration demands institution-wide alignment, governance clarity, risk management, and long-term infrastructure investment. Winners will treat digital money as core strategic infrastructure rather than experimental projects. 

While stablecoins may in some cases resemble a narrower, one-to-one reserve model, fractional reserve banking remains fundamental to economic activities such as credit creation, lending, and mortgages. The future will see the co-existence of various money forms tailored to utility, risk, and liquidity profiles. 

The discussion reinforced that stablecoins are already moving into practical application across cross border payments and FX, crypto backed lending and borrowing, collateral and margin management, institutional treasury and on-chain settlement.

In the UK context, there was a strong sense that sterling denominated stablecoins could reduce friction in cross border trade and enable on-chain activity in sterling, reducing reliance on USD based infrastructure.

An important point from the panel was that “stablecoin” is not a single risk category. The market is likely to differentiate between a well-governed, transparent, prudently backed stablecoin and higher risk or less well-structured products carrying the same label.

The same principle applies to EMIs and banks. The label alone is not enough, factors such as reserve quality, segregation, redemption, governance, and legal structure are critical.

Several speakers highlighted that well designed digital money models can, in some respects, offer greater transparency than traditional finance creating the possibility that some digital money products compete not just on speed and cost, but also on transparency and confidence.  

Potential advantages include visible token supply on chain, more frequent or real-time reserve verification, API-based reconciliation, clearer trust or safeguarding structures and more transparent movement of value.

Mainstream adoption will not happen because the market finds the technology interesting. Adoption will depend on whether digital money offers tangible benefits such as, lower cost faster settlement, improved liquidity management, better FX outcomes, easier access, better user experience and integrated, intuitive wallet or payment journeys.

The winning models are likely to be those that translate infrastructure efficiency into user value.

Regulatory clarity is a precondition for mainstream institutional participation. Clear frameworks are critical to market confidence, operational resilience, product design, customer trust and long term scalability. 

The broader point was that firms best placed to succeed will be those able to combine innovation, sound legal structuring, regulatory credibility and operational robustness.

There was a strong sense that the UK remains well positioned to lead if it acts promptly. The panel noted that if the UK wants to remain competitive in digital money, it will need a clear and workable regulatory framework, infrastructure readiness, support for responsible innovation and policy decisions that keep pace with developments in other major markets.

Perhaps the clearest conclusion from the session was that this is not a binary shift from “old finance” to “new finance”. 

The next phase of market development will be about bridging bank money and digital money, legacy and on-chain payment rails, traditional institutions and digital-native businesses, and existing customers with new digital commerce forms. 

The likely outcome is not one system replacing another overnight, but a hybrid, interoperable financial architecture in which multiple forms of money co-exist.