Quiet drama in Toronto. Canada's six largest banks, which account for the overwhelming majority of the country's banking assets, are working together on a joint tokenized deposit project intended to make interbank payments faster, more efficient and programmable. A rare collective initiative in a sector where competition usually takes precedence over technological cooperation.
The Bank of Montreal, the Royal Bank of Canada, the TD Bank Group, the Bank of Nova Scotia, the National Bank of Canada and the Canadian Imperial Bank of Commerce are now moving forward together on ground that their American and European counterparts have been clearing for two years.
Key Points
The six largest Canadian banks are jointly exploring a tokenized deposit project for faster, programmable payments
A tokenized deposit remains recorded on the bank's balance sheet, unlike a stablecoin, while circulating on a blockchain infrastructure
The sextet controls more than 90% of the Canadian banking market, which gives the project immediate structural weight.
Initiative follows in the footsteps of JPMorgan, Citi and HSBC, as stablecoins surpass $300 billion in circulation
Tokenized deposits: What Canadian banks are making
A tokenized deposit is not a stablecoin. It is a digital representation, on a shared register, of a traditional bank deposit recorded as a liability of a commercial bank. The money remains on the establishment's balance sheet, covered by the same regulatory guarantees and the same deposit insurance mechanisms, but it circulates on a blockchain type infrastructure.
Concrete result: an interbank transfer which today takes several hours, or even several days in the case of cross-border settlement, can be completed in a few seconds, at any time and without a clearing window.
The second advantage lies in programmability. A tokenized deposit can include execution conditions: releasing funds only upon delivery of a title, triggering an installment payment over the course of a project, or synchronizing a payment in foreign currency with its counterparty. These automations, managed today by chains of intermediaries and manual reconciliations, become rules written directly into the asset.
The six establishments concerned weigh heavily. RBC and TD are among the twenty largest banks in North America by assets, and the sextet controls more than 90% of the Canadian banking market. When these six decide to build the same plumbing, the country's payment infrastructure mechanically changes.
Canada is catching up in crypto through the back door
Ottawa hasn't exactly rolled out the red carpet for digital assets in recent years. The Bank of Canada has paused its retail MNBC (central bank digital currency) project in 2024, due to a lack of public appetite, and the federal framework on stablecoins remains a work in progress, with the government having announced dedicated legislation in its fall budget.
Meanwhile, the banks chose the pragmatic route: building the tool without waiting for the law to name it. The model is nothing new elsewhere. JPMorgan has been running its tokenized deposits since 2019 via Kinexys (formerly Onyx), with daily volumes amounting to billions of dollars. Citi, HSBC and BNY Mellon have launched their own pilots.
In London, the Regulated Liability Network is exploring the same mechanism between competing banks. The Canadian project takes up this collective architecture, where each establishment issues its own tokens while guaranteeing their interoperability with those of its rivals.
The commercial issue is easy to read. Dollar-backed stablecoins now exceed $300 billion in circulation and are eating into cross-border payment flows that banks previously charged at high prices.
Tether and Circle settle in seconds what the SWIFT network takes two days to deliver. By tokenizing their own deposits, Canadian banks recapture the speed of blockchain without ceding control of the currency they create.
