Canada's six largest banks announced Tuesday they are exploring a shared Canadian-dollar tokenized deposit system designed to move money faster between financial institutions. Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Bank Group are forming the joint venture, with the first phase focusing on moving tokenized deposits across participating banks. The banks said additional institutions could join the project later.
Tokenized deposits are digital representations of money already held at a bank, rather than separate stablecoins issued by cryptocurrency companies. The participating banks say the system could support faster, programmable, around-the-clock payments while keeping customer funds within the regulated banking system.
The first phase will test efficient transfers of tokenized deposits across the participating Canadian financial institutions. A longer-term goal includes connecting to other emerging digital asset initiatives.
The initiative reflects a broader global trend. Banks worldwide are racing to put deposits on blockchain infrastructure. In the U.S., regional lenders are building a shared tokenized-deposit network, while JPMorgan, Citi and Wells Fargo have pursued their own institutional offerings. Swift recently began testing tokenized deposits for 24/7 cross-border payments with banks across six continents.
Canada has been developing infrastructure for tokenized financial markets. In March, the Bank of Canada, RBC and TD completed Project Samara, which issued, traded and settled a 100 million Canadian dollar bond on a distributed ledger using tokenized wholesale Canadian dollars. In May, Shopify and the National Bank of Canada backed a regulated digital Canadian dollar intended to operate around the clock.
The six-bank project does not yet commit the lenders to issuing a tokenized deposit, but it brings together most of Canada's largest banks to explore a common model for digital money.
