On September 22 local time, Canada's six largest banks announced that they are exploring the joint development of a Canadian-dollar-based digital currency, beginning with tokenized deposits. The participating banks are Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, Scotiabank, and TD Bank Group.
A tokenized deposit represents a bank deposit in the form of a digital token. In the first stage, the banks will examine how tokenized deposits could be transferred efficiently among Canadian financial institutions. Their longer-term goal is to connect them with other digital-asset initiatives. The concept is intended to increase payment speed and efficiency and support payments executed according to preset conditions while preserving existing safety and regulatory oversight.
The participating banks said they are working together to maintain the competitiveness and security of Canada's payment infrastructure as digital currencies develop globally. They said other deposit-taking institutions are expected to join at an appropriate time.
Canada's central bank, RBC, TD, and other participants completed Project Samara in March. In that trial, a C$100 million bond issued by Export Development Canada was traded on a distributed ledger and settled using central-bank deposits.
The six banks' announcement concerns an exploration of joint development; neither issuance of the tokenized deposit nor launch of a commercial service has been confirmed. The announcement did not identify a specific operator, technical design, timetable, or role for the Bank of Canada.