- Canada’s Big Six banks are exploring a shared Canadian-dollar tokenized deposit system.
- The first phase will test transfers of tokenized deposits across participating banks.
- The banks said the project could support faster programmable 24/7 payments.
Canada’s six largest banks are moving ahead with a joint effort around tokenized deposits, aiming to improve how money moves between financial institutions in the country. TD Bank announced Tuesday that Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Bank Group are part of the venture. The first stage is centered on digital representations of bank deposits moving across participating banks, while the longer-term plan is to connect with other digital asset initiatives. The banks said the work could bring faster, more efficient and programmable payments while keeping customer funds within the regulated banking system.
Canada banks unite on tokenized deposits
TD Bank said the six participating lenders are exploring a Canadian-dollar system built around tokenized deposits. The group includes Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Bank Group. According to the joint statement, additional banks may join the project later.
These lenders are known collectively as Canada’s Big Six, the dominant group in the country’s banking system. Their operations span consumer banking, commercial lending, capital markets and wealth management. By bringing together most of the country’s largest banks, the initiative creates a shared effort to examine a common model for digital money.
First phase of tokenized deposits testing
The first phase of the project is focused on moving tokenized deposits efficiently across Canadian financial institutions. The banks said the longer-term objective is to link this work with other emerging digital asset initiatives. At this stage, the project is centered on testing transfers between participating institutions.
The six-bank effort does not yet commit the lenders to issuing a tokenized deposit. Instead, it establishes a framework for exploration and testing. The project is aimed at assessing how digital representations of commercial bank deposits could be used in a shared system among banks.
How the banks describe the payment benefits
The banks said the project aims to provide faster, more efficient and programmable payments to Canadian customers. They also said the design would preserve financial stability and regulatory oversight. A shared system could also support around-the-clock payments while customer funds remain within the regulated banking system.
Tokenized deposits are digital representations of money and other assets already held at a bank. They differ from separate stablecoins issued by a crypto company. In this case, the participating banks are examining whether tokenized deposits can support payment activity inside the existing banking framework.
Tokenized deposits in Canada and abroad
Canada’s move comes as banks around the world work on deposit tokenization and blockchain-based payment 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 has also started testing tokenized deposits for 24/7 cross-border payments with banks across six continents.
The Canadian project also adds to the country’s broader work in tokenized financial markets. In March, the Bank of Canada, RBC and TD completed Project Samara, a test that 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 designed to operate around the clock.
Conclusion
The new initiative places tokenized deposits at the center of a joint effort by Canada’s six largest banks to test faster movement of money between institutions. The first phase is limited to transferring tokenized deposits across participating banks, but the banks have also outlined a longer-term plan to connect with other digital asset initiatives. They said the system could support faster, programmable and 24/7 payments while keeping funds in the regulated banking system. Although the project does not yet amount to a commitment to issue tokenized deposits, it brings together most of Canada’s largest lenders to explore a shared Canadian-dollar model.
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