Canada's Big Banks Test Tokenized Deposits for Faster Payments

Canada's six largest banks, Bank of Montreal, CIBC, National Bank, Royal Bank, Scotiabank, and TD, are exploring a new way to move money digitally through a technology called 'tokenized deposits.'

This concept does not involve creating a new Canadian currency or cryptocurrency, but rather represents existing Canadian-dollar deposits held in commercial bank accounts using distributed ledger technology, such as blockchain.

The banks are examining whether this technology could eventually make some payments faster, more efficient, and programmable.

The Office of the Superintendent of Financial Institutions (OSFI) does not consider tokenized deposits to be legally different from conventional deposits simply because they use different technology.

This means that Canadians will still have access to banknotes as long as they want to use them, according to the Bank of Canada. Physical money continues to play a role in everyday transactions despite the growth of electronic payments.