Canadian Banks Join Forces on Tokenized Dollar Deposits Initiative

Canada's six largest banks are collaborating on a project to create tokenized Canadian dollar deposits. This initiative involves Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank, and TD Bank Group.

The first phase will focus on enabling the transfer of these digital representations between financial institutions in Canada. The system aims to facilitate faster and programmable payments, with longer-term plans including opening it up to other deposit-taking institutions.

This project comes after the Office of the Superintendent of Financial Institutions (OSFI) clarified the legal permissibility of tokenized deposits for financial institutions. According to OSFI, these digital representations remain a liability of the bank where they are held and do not change their legal nature simply because they use underlying technology.

Canada is building out its regulatory framework for digital money. A federal framework for fiat-backed stablecoins was enacted in March as part of Bill C-15. However, this framework only covers issuers that are not financial institutions.