Six Canadian banks are jointly exploring a system for moving tokenized Canadian-dollar deposits between financial institutions, an early-stage initiative that could test how commercial-bank money operates across shared digital infrastructure.
Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Bank Group announced the project on Sept. 22. Its first phase is intended to examine transfers of tokenized deposits among Canadian financial institutions. The banks said a longer-term goal is to connect the work with other emerging digital-asset initiatives and eventually include other deposit-taking institutions.
The announcement is exploratory rather than a product launch. It does not identify the technology provider, network design, governance model, pilot timetable or expected launch date. It also does not specify how an interbank transfer would be settled, how each bank’s deposit liability would be represented, or which customers could participate.
OSFI clarification defines the regulatory starting point
The initiative follows a Sept. 10 statement from Canada’s Office of the Superintendent of Financial Institutions. OSFI said the technology used to build or deliver a financial product does not determine its legal nature and that tokenized deposits are not legally distinct from traditional deposits.
That position gives federally regulated institutions a clearer starting point, but it is not a blanket approval for any particular design. OSFI said financial institutions remain responsible for compliance with applicable laws and regulations, including when third parties perform activities on their behalf. The regulator specifically pointed to its technology and cyber-risk guidance and its third-party risk-management guidance. It also expects institutions to engage their lead supervisors before launching novel products or services.
For payments firms, the distinction matters. A tokenized deposit is still a bank deposit rather than a new asset category merely because it is represented on digital infrastructure. The banks’ project is therefore aimed at changing how deposit claims can be transferred and programmed, not replacing the regulated institutions that issue them.
Interbank transfer is the difficult part
Tokenizing a claim inside one bank is different from moving value between banks. A multi-institution system must establish how a token associated with one bank’s liability is accepted by another institution, how records are synchronized, and how the corresponding interbank obligation reaches final settlement. The announcement does not say whether the six banks would use a common ledger, connected private ledgers or another architecture.
The banks describe faster, more efficient and programmable payments as objectives. Those benefits remain prospective. Their realization will depend on operating rules, availability, transaction limits, identity and compliance controls, liquidity arrangements, exception handling and integration with core banking and existing payment systems.
Programmability also creates control questions. Institutions will need to determine who can create payment conditions, how those conditions are authorized and changed, and what happens when automated instructions conflict with sanctions screening, fraud controls, court orders or customer disputes. A shared design would also need clear responsibility for software defects, cyber incidents and failures at technology vendors.
What to watch next
The most important next milestone will be a defined pilot rather than another statement of intent. Useful disclosures would include the settlement asset and mechanism, network operators, participant eligibility, supported use cases and the legal treatment of transfers between issuing banks.
Interoperability will also be central. The banks’ longer-term reference to other digital-asset initiatives leaves open whether the system might connect to tokenized securities platforms, stablecoin networks or other forms of digital money. No such connection has been announced.
If the group can agree on common rules and prove transfers across separate institutions, the initiative could become a meaningful Canadian test of bank-issued digital money. For now, it establishes coordinated exploration and a regulatory baseline—not an operational payment rail.