Key Takeaways
Canada's six largest banks said on September 22 that they are jointly exploring a Canadian dollar tokenized deposit system.
The first phase would move tokenized deposits between Canadian financial institutions, with a longer-term plan to connect to other digital asset projects.
The move follows guidance from regulator OSFI that tokenized deposits are not legally distinct from traditional deposits.
Canada's biggest banks are building digital money together. Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Bank Group said on September 22 that they are jointly exploring a tokenized deposit system built on the Canadian dollar, according to a joint statement released through CIBC.
What a tokenized deposit is
A tokenized deposit is an ordinary bank deposit recorded on a digital ledger, so it can move and settle faster and follow programmed rules. The banks said the aim is faster, more efficient and programmable payments while keeping the safety, stability and oversight of commercial bank money. They framed it as a competitiveness question, saying "Canada's payments infrastructure must continue to be competitive and secure."
The first phase is about moving tokenized deposits between Canadian institutions. The longer-term goal is to connect with other emerging digital asset initiatives, and the banks said other deposit-taking institutions could join at the appropriate time.
Why Canada's banks are moving now
Earlier this month, Canada's Office of the Superintendent of Financial Institutions said tokenized deposits are not legally distinct from traditional deposits, which removes a big question mark. In March, the Bank of Canada, Export Development Canada, RBC and TD completed Project Samara, a tokenized government bond pilot, The Block reported.
None of this is new on its own. What's new is an entire national big-bank tier moving at once. WYDE has tracked the same shift as Bastion won conditional federal approval to run its stablecoin business as a national trust bank and as the ECB moved to buy tokenized bonds through its Pontes platform. Worth watching.
People Also Ask
Which Canadian banks are exploring tokenized deposits?
BMO, CIBC, National Bank of Canada, RBC, Scotiabank and TD Bank Group.
What is a tokenized deposit?
It is a regular bank deposit represented on a digital ledger so it can move faster and be programmed, while remaining a bank deposit.
Are tokenized deposits the same as stablecoins?
No. A tokenized deposit is a liability of a regulated bank, and OSFI says it is legally the same as a traditional deposit. A stablecoin is issued separately and backed by reserves.
When will Canada's tokenized deposit system launch?
The banks have not given a date. They describe the project as exploratory, starting with transfers between Canadian financial institutions.