Canada's Big Six Banks Launch Tokenized Deposit System for Faster Payments

Canada's Big Six banks have launched a joint venture to explore a Canadian-dollar tokenized deposit system. The initiative, which includes Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, Scotiabank, and TD Bank Group, aims to test transfers of tokenized deposits between participating institutions.

The banks said the first phase would focus on moving tokenized deposits between Canadian financial institutions before potentially connecting to other digital asset systems. This move follows a clarification from the Office of the Superintendent of Financial Institutions that tokenized deposits are 'not legally distinct from traditional deposits,' and the underlying technology does not determine its legal nature.

The banks also stated that the system is intended to support faster, more efficient, and programmable payments to Canadian customers while maintaining financial stability and regulatory oversight. This initiative ties into Canada's broader work on tokenized financial markets, including Project Samara, where the Bank of Canada, RBC, and TD completed a pilot that issued, traded, and settled a 100 million Canadian dollar bond on a distributed ledger.