Canada’s Big Six Banks Are Working on a New Form of Digital Money

Canada’s six biggest banks are working together on a new form of digital money.

RBC, TD, BMO, CIBC, Scotiabank and National Bank of Canada said Tuesday they’re exploring a Canadian dollar-based tokenized deposit system, starting with transfers between financial institutions.

Tokenized deposits are essentially regular bank deposits represented digitally on a shared system. The money would still be issued by commercial banks and denominated in Canadian dollars, rather than becoming a new cryptocurrency or a digital currency issued by the Bank of Canada.

The banks say the first phase would focus on moving tokenized deposits between Canadian financial institutions, with the goal of making payments faster, more efficient and programmable.

“This collaborative effort reflects a shared view that as digital money evolves globally, Canada’s payments infrastructure must continue to be competitive and secure,” the banks said in their joint announcement on Tuesday.

The group says it also wants the system to maintain existing safeguards around financial stability and regulation, while eventually opening participation to other deposit-taking institutions.

This is separate from the Bank of Canada’s work on a possible digital Canadian dollar. The central bank launched a public consultation on the idea in 2023, drawing almost 90,000 responses. The Bank later said respondents placed a high value on privacy and continued access to cash, while many were skeptical that a digital dollar was needed.  In that consultation, 85% of respondents said they would not use a hypothetical digital Canadian dollar, according to subsequent Bank of Canada research.

Canada has experimented with digital money before. The Royal Canadian Mint’s MintChip project was shut down in 2018, while Ottawa has also been moving further into digital identity through a digital ID agreement with the European Union.

For now, the banks haven’t announced a launch date or detailed how customers would actually interact with tokenized deposits.The project is still in the exploration stage, but if it moves ahead, it could eventually sit behind everyday banking and payments without customers necessarily dealing with tokens directly.