Canada’s top 6 banks test shared tokenized deposit network for faster payments

Canada’s six largest financial institutions have started to experiment with a shared interbank system for tokenized deposits, aiming to accelerate money transfers between banks and enhance programmable payment capabilities. The venture brings together Bank of Montreal, CIBC, National Bank, RBC, Scotiabank, and TD Bank Group, forming a consortium to explore next-generation digital payment solutions.

Trial phase for interbank tokenized CAD

The initiative’s initial phase will run tests on transferring tokenized Canadian dollar deposits among the participant banks. These digital deposits represent customers’ existing funds held within regulated banks, differing from stablecoins which are typically issued by private cryptocurrency firms and often operate outside the traditional financial sector.

According to representatives from the consortium, moving to a tokenized model could allow for continuous, 24/7 transfers, programmable payments, and improved settlement times. Despite these ambitions, the group has not committed to issuing tokenized deposits on a permanent basis, nor announced a specific timeline for their launch.

Participants expect the shared network could process payments around the clock and support programmable transactions, maintaining regulatory oversight and security for customer balances.

The banks have indicated that more Canadian financial institutions could join the initiative as it evolves, provided that regulatory, technical, and operational requirements are met.

Canada’s digital payment experiments expand

These efforts build on a growing trend of tokenization in both Canadian and global finance. In a notable previous experiment, the Bank of Canada, together with RBC and TD, completed a C$100 million bond issuance and settlement utilizing tokenized Canadian dollars across distributed-ledger infrastructure. This demonstrated the practical integration of regulated digital money with traditional financial controls.

Parallel projects have emerged internationally. In the United States, major banks recently participated in stablecoin pilots using blockchain networks like Stellar to facilitate cross-border transactions. In Europe, the European Central Bank launched Pontes, a platform for settling tokenized assets in central bank money by connecting blockchain networks with the TARGET payment system.

Mini dictionary: Pontes is a settlement platform established by the European Central Bank to connect blockchain-based networks with the existing Eurosystem payment infrastructure, enabling transaction settlement in central bank-issued money.

Competition between banks and stablecoin issuers

The Canadian banks’ move places them alongside non-bank stablecoin issuers, as both groups race to develop digital payment and settlement solutions anchored to local currencies. In recent months, Canada has also seen the launch of regulated digital Canadian dollars and expanded digital asset services for community banks and credit unions, backed by corporate players such as Shopify.

With participants exploring various tokenized banking models, the project remains in its pilot stage and future expansion will depend on the outcome of technical tests, as well as compliance with regulatory frameworks.

The consortium has reiterated that the shared interbank system is currently exploratory, with no final commitments yet made regarding the full-scale issuance or rollout of tokenized CAD deposits.