Canada’s Big Six banks to test tokenized deposit system for faster payments

Canada’s six largest banks just collectively decided that moving money between each other could use an upgrade. On September 22, Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank, and TD Bank Group announced a joint initiative to build a Canadian-dollar tokenized deposit system designed to make interbank transfers faster and, eventually, programmable.

The first phase focuses on something deceptively simple: moving tokenized deposits efficiently between the six institutions. The longer-term ambition is broader, targeting interoperability with digital asset initiatives and the kind of programmable payment infrastructure that could reshape how Canadian businesses and consumers interact with their banks.

What tokenized deposits actually mean

Think of a tokenized deposit as your regular bank deposit, except represented as a digital token on a distributed ledger rather than as an entry in a legacy database. The money is still a bank liability, still insured, still regulated. The wrapper is just different, and that wrapper enables things traditional rails struggle with, like near-instant settlement, conditional payments that execute automatically when certain criteria are met, and seamless movement across institutions without the usual friction of correspondent banking.

Canada’s financial regulator made this approach considerably easier to pursue. On September 10, the Office of the Superintendent of Financial Institutions clarified that tokenized deposits would not be treated as a separate asset class simply because they sit on distributed ledger technology. In regulatory terms, a tokenized deposit is a deposit, full stop. That guidance effectively removed a major ambiguity that had been holding banks back from experimenting with the technology.

The timing between the OSFI guidance and the Big Six announcement, just 12 days apart, is not a coincidence. Banks don’t typically launch multi-institution collaborative projects without regulatory air cover, and OSFI essentially handed them a green light.

Why all six banks at once

The decision to launch with all six major banks simultaneously is notable. Most tokenized deposit pilots globally have started with one or two institutions testing the waters before others join. Canada’s approach of getting every systemically important bank on board from day one suggests a coordinated strategy, likely shaped by conversations with regulators and Payments Canada, the organization that operates the country’s payment clearing and settlement systems.

There is a practical reason for the all-in approach. Tokenized deposits are only useful for interbank transfers if the counterparty also recognizes and accepts them. A system where RBC can send tokenized Canadian dollars but TD can’t receive them is not a system at all. By starting with full participation from Canada’s Big Six, the initiative avoids the chicken-and-egg problem that has stalled similar projects elsewhere.

The global context

Canada is not operating in a vacuum. Singapore’s Project Guardian, led by the Monetary Authority of Singapore, has explored tokenized deposits alongside tokenized bonds and foreign exchange. The Bank for International Settlements has overseen multiple projects examining how tokenized money could work across borders, including Project Agorá, which examines the application of tokenization in commercial bank deposits and wholesale central bank money.

What makes Canada’s initiative distinctive is the scope of institutional buy-in at launch. Rather than a sandbox experiment or a proof of concept involving one or two banks and a regulator, this is the entire core banking sector moving together with explicit regulatory backing.

The initiative builds upon previous experiments within Canada’s financial ecosystem. In March 2026, BMO partnered with Google Cloud and CME Group to develop 24/7 tokenized cash capabilities.