Canada's six largest banks — BMO, CIBC, National Bank of Canada, RBC, Scotiabank and TD — have begun jointly exploring Canadian-dollar digital money solutions, starting with tokenized deposits, according to an official announcement.

The first phase of the initiative aims to move tokenized deposits between Canadian financial institutions. Over the longer term, the group intends to connect the system with other digital-asset initiatives, and additional deposit-taking institutions could be invited to participate. The multi-bank format matches that first objective, since transfers between institutions require more than one participating issuer.

The banks have not launched a commercial product. They have also not disclosed which technology would operate the network, whether each institution would issue its own token, or when customers could begin using it.

What the banks confirmed — and what they did not

The announcement confirms six participating Canadian banks, a focus on tokenized Canadian-dollar deposits, transfers between financial institutions, and possible connections to other digital-asset projects.

Details that remain undisclosed include the ledger or payment infrastructure, the issuer and operator structure, the final settlement method, and customer access launch timing.

What happens when a deposit changes banks

A tokenized deposit is a digital representation of money held at a commercial bank. Changing how the deposit is recorded does not automatically change its legal nature: it remains a liability of the bank that holds the customer's money.

This raises a question that does not arise when a customer moves tokens between two wallets controlled by the same issuer. If a deposit created at Bank A reaches a customer of Bank B, the system must determine what happens to the original claim. Bank B could redeem it, convert it into one of its own deposits, or continue holding a claim on Bank A. The announcement does not identify which model the participants are considering.

Every workable design must perform three functions:

1. Authorization — confirm that the sender controls the deposit and has approved the payment.
2. Interbank coordination — calculate what each participating institution owes after the transfer.
3. Final settlement — complete the obligations between the banks so the transfer becomes final rather than remaining provisional.

Those functions could operate on a single shared ledger, through connected private systems, or under another structure. The banks have not said which architecture they intend to use.

A common token format would not solve settlement

The difficult part is not representing six banks' deposits digitally. It is ensuring that the resulting claims remain transferable and redeemable at par — meaning one tokenized Canadian dollar remains exchangeable for one conventional Canadian dollar.

A shared technical standard would not, by itself, determine which bank carries the liability after a transfer. The system would also need rules covering liquidity, customer verification, failed payments, technical outages, and redemption into ordinary account balances.

Without those rules, two institutions could run compatible technology while still disagreeing over when a payment becomes final or which bank owes the recipient. The project's usefulness will therefore depend on its legal and settlement arrangements as much as its software.

Tokenized deposits are not public stablecoins

• Tokenized bank deposit: a liability of the bank that issued or holds the deposit, subject to banking supervision and customer-verification requirements. Access may be restricted to approved customers and participating institutions.
• Public stablecoin: a token issued under a separate reserve and redemption arrangement, with the holder's legal rights depending on the issuer and product structure. It may circulate between unaffiliated wallets across public blockchain networks.

The Canadian project may eventually support some of the same payment functions as a stablecoin while keeping customers inside the regulated banking system. It is not, however, a publicly available token, and the banks have not said that customers will be able to hold it in personal wallets.

The announcement also does not explain whether the eventual product would qualify for deposit insurance. That would depend on its legal structure, the issuing institution and whether it meets the normal conditions for an eligible deposit.

OSFI clarified the legal position before the announcement

The Office of the Superintendent of Financial Institutions (OSFI) clarified on September 10 that a tokenized deposit is not legally different from a conventional deposit solely because of the technology used. A previous report explains what that means for bank liability, supervision, cyber risk and third-party providers.

Under that guidance, financial institutions remain responsible for complying with existing laws and risk-management requirements, and OSFI expects them to consult their supervisors before launching novel products or services. The guidance makes clear that using a token does not automatically create a new legal category, but it does not answer the project-specific questions around settlement, redemption, customer access or deposit insurance.

Project Samara tested a different part of the process

The Bank of Canada, Export Development Canada, RBC and TD completed a separate distributed-ledger experiment in March 2026. Project Samara involved a C$100 million tokenized bond sold to a closed investor group, with payments settled in wholesale central bank deposits, according to the Bank of Canada. RBC and TD appear in both efforts, meaning two members of the new consortium have already taken part in a completed Canadian distributed-ledger trial.

The experiment showed that a tokenized security could be issued, traded and settled using distributed infrastructure. It also exposed system complexity, liquidity costs, integration challenges, governance demands and the need for reliable fallback mechanisms.

Samara proved that a tokenized security could settle with central bank money inside a controlled group. The new bank initiative asks a different question: whether commercial-bank liabilities can move across institutions without losing their identity or convertibility.

Four questions will determine whether the model works

1. Who issues and operates the digital deposit? The answer will determine which institution owes the holder and who controls the payment infrastructure.
2. How are obligations between banks settled? A token transfer is not enough if one institution still owes money to another afterward.
3. Who can hold or redeem the deposit? The product could remain limited to banks and institutions or eventually become available to businesses and consumers.
4. What happens during failures? The system needs rules for mistaken payments, outages, fraud, insolvency and transactions that begin but do not settle correctly.

Cooperation is confirmed; the payment network is not

The announcement establishes cooperation between Canada's largest banks, not a functioning tokenized payment network. Its significance will depend on whether the participants can settle and redeem deposits across institutional boundaries — not simply record them in token form. Observable next steps include disclosure of the intended technology, the possible addition of further deposit-taking institutions, and consultations with supervisors of the kind OSFI has said it expects before novel products or services launch.

This article is provided for informational purposes only and does not constitute financial, legal or investment advice.

Source: Coindoo