Corporate treasurers typically operate with sufficient liquidity, but often face constraints in accessing it  at the right time. Multinational companies hold funding across accounts, entities and jurisdictions, but banking hours, market cut-offs and weekends still shape when that money can move. This creates a recurring treasury challenge, with firms pre-funding accounts, holding idle balances or relying  on forecasts that can prove wrong when payment demand changes.

Lewis Sun, global head of digital currencies, corporate and institutional banking at HSBC described that constraint as the starting point for HSBC's tokenised deposit service (TDS). Clients increasingly want 24/7 liquidity access. "If I can't, then it is extremely important to do cash flow forecasts because any inaccurate forecasts lead to either operational disruptions or higher buffer costs." HSBC's answer is not to create a new form of money outside the banking system. It is to make a commercial bank deposit usable in a more digital, real-time and always-on way.

HSBC has launched tokenised deposit service capabilities across major treasury centres including Hong Kong, Singapore, the United States, Europe and the United Kingdom, with the United Arab Emirates identified as the next market.  Sun said a tokenised deposit should give clients the benefits of digital money while preserving the compliance, safety, interest-bearing and institutional characteristics of a bank deposit.

Weekend liquidity stops being a forecast

Sun pointed to a corporate client with weekend payout obligations in Europe as a live use case. Before using the tokenised deposit service, he said the company had to pre-fund its payout account every Friday based on expected demand. If it underfunded the account, payments could fail and affect the customer experience. If it overfunded the account, it left idle liquidity in a payout account instead of deploying that cash elsewhere for yield.

The service changed the funding decision from a forecast exercise into an on-demand treasury process. "They just top up the payout account with exactly how much they need to pay out over the weekend," Sun said. "That is a very straightforward use case, but it can deliver a huge benefit because the buffer funding cost of liquidity can be taken out completely." For the treasurer, as Sun explained it, the value is not an abstract blockchain benefit. It is the ability to fund an operational account when demand materialises, including outside normal banking hours.

The workflow behind payment initiation and reconciliation also changes. Sun said tokenised deposits are application programming interface-enabled and can integrate into a client's treasury processes, including treasury funding forecast systems. Some clients use an artificial intelligence engine to initiate payments based on actual demand, which removes the need for staff to remain available overnight or over the weekend to move funds manually. HSBC keeps the compliance architecture within the existing bank environment, with Sun noting that "there is no deviation from the back-end compliance point of view" and that screening and monitoring systems remain the same.

A deposit first, a digital instrument second

Sun placed tokenised deposits within a broader digital money landscape that includes central bank digital currencies (CBDCs), stablecoins and tokenised deposits. CBDCs are backed by central bank money, stablecoins by private issuers and tokenised deposits by commercial bank money. HSBC does not treat them as rivals because each serves a distinct market need. "We do not choose among them for one winner," Sun observed. "Different types of digital money will apply to different use cases."

That division explains why he sees tokenised deposits and HSBC's planned Hong Kong dollar stablecoin as complementary rather than competing instruments. HSBC's planned Hong Kong dollar stablecoin sits within Hong Kong's regulated stablecoin environment, where fiat-backed digital cash instruments are subject to specific rules. Sun placed the planned stablecoin in a retail and merchant payment context, including person-to-person, person-to-merchant, e-commerce and potentially Web3 settlement. By contrast, he positioned tokenised deposits for institutional treasury. "Why do we go for tokenised deposits for institutional clients? Because institutional clients care about safety, compliance, interest yield and real-time access," he said.

"The nature of the underlying instrument does not change; it is still a deposit," Sun explained. "As a bank deposit, it follows very clear compliance and regulatory policies. It does not deviate from prevailing policies." He added that the instrument remains interest-bearing, offers institutional-grade safety and security, and allows deposits mirrored to the token to continue generating interest. In his view, tokenisation adds real-time, 24/7 movement and potential smart contract functionality without changing the basic character of the commercial bank deposit.

The network follows treasury centres

HSBC has prioritised tokenised deposit service markets in part according to where multinational companies manage funding. The current locations are "not random", Sun said, because they represent prominent treasury centres where clients place funding centres. He identified Singapore as an Association of Southeast Asian Nations treasury location, Hong Kong as a Greater China treasury location, and the United States, Europe and the United Kingdom as other major corporate funding locations.

The rollout reflects client demand rather than a simple country-by-country technology push. HSBC weighs payment volume, payment value and client readiness, including how quickly clients can integrate, according to Sun. Regulatory barriers, foreign exchange controls and country-specific infrastructure requirements also form part of the assessment. "The fundamental driver is pipeline clients and client demand," he said, adding that HSBC's Asia Pacific presence across 18 markets helps it identify corridors where treasury demand is most evident.

Sun said the expansion still has to move in stages because tokenisation alone does not complete the product. He said HSBC may use a globally consistent tokenisation layer, but each market still requires integration with core banking systems, payment systems, compliance systems and screening systems. Sun described the open markets and key treasury centres as largely a matter of implementation schedule, while markets with foreign exchange policies or country-specific requirements may require additional controls or features.

Programmability is the next layer

Sun said real-time movement solves the first problem, while programmability creates the next set of benefits, enabling payments to happen automatically when conditions are met. Domestic instant payment systems such as FAST and PayNow already support fast 24/7 transfers without blockchain, so speed alone is not the main distinction. "Moving money quickly probably does not require a blockchain," he said. "Domestic transfers using PayNow and FAST do not engage a blockchain network, but programmability is an additional benefit offered by smart contracts over blockchain."

Sun identified three areas where programmability could matter for treasury. The first is payment triggering, where a treasurer sets conditions such as time, amount and jurisdiction, and the payment executes when those conditions are met. The second is control, where smart contracts manage limits, velocity rules and new-beneficiary restrictions that now rely on manual checks or static back-end rule settings. The third is settlement between digital cash and tokenised assets, where the payment and asset transfer could be linked in the same automated process.

That third area points beyond treasury funding into capital markets settlement. Many tokenised assets still settle against fiat currencies, Sun noted, which limits the ability to achieve true 24/7 delivery-versus-payment settlement. In plain terms, that means the asset and cash do not always move together at the same time. Connecting tokenised cash to tokenised assets could reduce settlement risk, lower cost and reduce liquidity consumption. "With this programmability, those two processes, or several different processes, can be combined into a single smart contract," Sun said.

Interoperability  determines scale

Interoperability, the ability to make HSBC's tokenised deposit capability work across different networks and platforms, has become more important as clients, counterparties and assets move onto separate infrastructures. HSBC initially built its own tokenised deposit infrastructure, but Sun said many clients and industry participants already operate across a range of established networks. Some may use public blockchains, while others may use different forms of infrastructure. Sun said HSBC cannot expect every client or counterparty to move onto its own chain.

That thinking led HSBC to pilot tokenised deposit capability on Canton Network, according to Sun. Canton Network is a blockchain developed by Digital Asset that allows financial institutions and digital asset platforms to connect on shared infrastructure.

"Our tokenised money capabilities should increasingly be blockchain agnostic," Sun said. In practical terms, blockchain agnostic means HSBC wants its tokenised money to be available where clients and counterparties already operate. Sun added that HSBC would assess privacy, security and smart contract design before engaging with any new infrastructure.

Sun said the same network logic applies across banks. He cited HSBC's participation in initiatives including Hong Kong's Project Ensemble, the United Kingdom's Regulated Liability Network and Swift's ledger initiative. He said HSBC welcomes other developments but applies a clear test. The initiative needs a credible path towards production and scale. "Payment is essentially a network effect," he said. "Within one organisation, you can only service clients with limited network strength. Once you expand that into a broader payment network, it becomes much more powerful."

The issue has become more urgent as banks and market infrastructures, including DBS, Standard Chartered, JPMorgan Kinexys and Japan's Progmat ecosystem, develop tokenised money platforms with interoperability in mind. For HSBC, the strategic task is to ensure that its tokenised deposit service can connect into the rails that clients, counterparties and market infrastructures choose to use.

Adoption depends on the treasury business case

Sun said large corporates and institutional clients with substantial treasury funding pools are the early adopters because the efficiency gains are easier to quantify. He said these clients want to maximise liquidity utilisation, improve operational efficiency and gain real-time access to their own funding. In Sun's view, the business case becomes strongest where companies carry large liquidity buffers or manage funding across multiple jurisdictions.

Sun said the remaining adoption challenge is not only technical. He said the market still needs education on the difference between tokenised deposits, native crypto coins and stablecoins. Clients also need clarity on the unique attributes of tokenised deposits and the integration requirements involved in using them. "The conversations we currently have with many clients are no longer about whether they can use it. It is a matter of timing and prioritisation for different companies."
Sun said that timing depends on each client's calculation of benefits. Some may move quickly because they see value in reduced buffers, better liquidity deployment and automated workflows. Others may wait until the use cases mature, the network reaches more treasury centres, or internal integration priorities align. Sun said real-time access to liquidity and better investment options will remain the main adoption drivers.

Banks race to build trusted settlement

Sun placed HSBC's tokenised deposit strategy within a broader effort by banks to keep commercial bank money relevant as financial markets become more tokenised. For wholesale treasury, his proposition is that commercial bank deposits can become digital, programmable and always-on without losing the trust framework that already supports institutional banking.

The next phase will test whether tokenised deposits can move beyond individual bank platforms and become part of a shared settlement layer, according to Sun. That means a common way for regulated digital money to move between banks, clients and market infrastructures. HSBC expects to continue enhancing the service as new use cases emerge, including different blockchains, digital money tokens, workflow designs and partnerships with peer banks. Sun described the work as still being at the start of the journey and said HSBC would continue to study CBDCs, stablecoins and tokenised deposits in relation to providing real market solutions.

Tokenised deposits are unlikely to scale because they are new, or because they sit on blockchain infrastructure. They will scale only where they solve treasury and settlement problems that banks and corporates already recognise. That puts the emphasis on production use cases, common operating standards, regulatory comfort and connections into the networks where institutional clients already manage liquidity, assets and risk.

The question now is no longer whether banks can issue a tokenised form of money, but whether that money can move across counterparties, jurisdictions and platforms with the same confidence  as deposits today. Trust remains central to HSBC's product design, according to Sun. "Trustworthiness is something we put into the design of our products," he said. If tokenised deposits can combine that trust with 24/7 liquidity, programmable controls and interoperable settlement, they could shape how corporate liquidity moves in tokenised markets.