Canadian Banks Explore Tokenized Deposits Amid Interbank Settlement Challenges
Canada's six largest banks are working together to develop tokenized CAD deposits, which would allow for digital claims of money held at commercial banks. The initial focus is on transfers between financial institutions, with a longer-term goal of connecting the system to other digital-asset initiatives.
The participating banks include BMO, CIBC, National Bank of Canada, RBC, Scotiabank, and TD. They have not launched a commercial product yet and have not disclosed which technology will operate it or how customers can begin using it.
Tokenized deposits remain liabilities of the bank holding the customer's money, creating challenges for interbank settlement. The banks are exploring three functions: authorization, interbank coordination, and final settlement, but they haven't revealed how these functions will be performed.