Summary
- The six largest banks in Canada—RBC, TD, BMO, Scotiabank, CIBC, and National Bank—unveiled a plan on Tuesday to develop a shared system for tokenized Canadian-dollar deposits, initially focusing on interbank transfers.
- This initiative is distinct from the Bank of Canada's halted consultation regarding a digital dollar, where 85% of nearly 90,000 participants indicated they would not use a theoretical digital Canadian dollar.
- Both Scotiabank and TD are part of a group of 21 banks creating a U.S. dollar stablecoin, while BMO has launched a tokenized cash platform in collaboration with CME Group and Google Cloud.
The six leading banks in Canada have announced plans to create a shared infrastructure for digital currency.
On Tuesday, RBC, TD, BMO, Scotiabank, CIBC, and National Bank revealed their intention to explore a system for tokenized deposits in Canadian dollars, with the initial phase concentrating on facilitating deposits among the banks rather than for consumer use.
A tokenized deposit refers to a standard bank deposit that is represented as a digital token on a shared ledger—essentially the same money, same bank, and same regulations, but utilizing a different network. It is neither a new cryptocurrency nor a central bank digital currency (CBDC).
The banks aim to ensure that the system is both "competitive and secure," as stated in their joint announcement, while maintaining the existing protections that govern traditional bank money. They also express interest in allowing other Canadian deposit-taking institutions to participate in the future.
Currently, transferring money between banks in Canada can be slow, except for basic e-transfers. The proposed token system could enable banks to settle these transfers instantly and continuously, with the potential for automated payments—such as releasing funds as soon as a shipment clears customs.
Customers are unlikely to notice any direct changes, as the system would operate behind the scenes, similar to how most people are unaware of the mechanics behind an ACH transfer today.
This initiative is separate from the ongoing discussion about a digital dollar in Canada. Earlier this year, the Bank of Canada conducted a public consultation regarding a potential digital Canadian dollar, receiving nearly 90,000 responses, with 85% of respondents indicating they would not use such a currency. Many emphasized the importance of privacy and continued access to cash.
Canada has previously explored digital cash, including the Royal Canadian Mint's MintChip project, which was ultimately discontinued after its app was shut down in 2018.
In the U.S., major banks such as JPMorgan, Citi, Bank of America, and Wells Fargo are working on a competing tokenized deposit network through The Clearing House, aiming for a launch in the first half of 2027 to prevent stablecoins from draining deposits. Additionally, 39 state banking associations in the U.S. are developing their own version called the BankChain Alliance, focusing on community and regional banks.
Scotiabank and TD are also involved in the development of a joint U.S. dollar stablecoin, with plans for a 2027 launch, indicating that these institutions are simultaneously investing in both tokenized deposits and stablecoins.
BMO has already launched its tokenized cash platform this year in collaboration with CME Group and Google Cloud, enabling institutional clients to conduct transactions with U.S. dollars around the clock for margin and collateral purposes.
The six Canadian banks have not yet announced a specific launch date for their project. The initial phase is limited to transfers among the participating banks, with the potential for broader access to other deposit-taking institutions still being a goal rather than a firm commitment.