Canada Is Building Its Tokenized Money Rails. Here Is How Banks Can Build for What Comes Next
Canadian banks are accelerating tokenized money initiatives, with major lenders exploring CAD tokenized deposits and joining global projects like BIS’s Agorá to shape programmable payment rails.
Canadian banks are increasingly embracing tokenized money, shifting from skepticism to active participation in shaping its infrastructure. Regulatory clarity from OSFI in September confirmed tokenized deposits hold the same legal status as traditional deposits, removing a key barrier to adoption. Six major banks—BMO, CIBC, National Bank, RBC, Scotiabank, and TD—announced a joint exploration of CAD tokenized deposits for interbank payments, signaling a coordinated push into programmable money. Participation in global initiatives like BIS’s Project Agorá, alongside the Bank of Canada’s involvement, underscores Canada’s ambition to influence the design of tokenized financial rails.
The absence of a CAD-pegged stablecoin forces Canadian businesses to rely on USD options for 24/7 programmable transactions, highlighting a gap the banking sector aims to fill. Banks prioritize solutions settled in central bank money, governed under OSFI oversight, with a focus on maintaining control over keys, data, and policy. Tokenized deposits remain on banks’ balance sheets, enabling instant 24/7 settlement and programmable conditions, but raise operational questions about network selection, core banking integration, and consistent controls across multiple rails.
A hypothetical cross-border transaction—converting CAD to a CAD stablecoin, then to USDC and a euro stablecoin—illustrates the need for seamless liquidity and orchestration. Bank FX desks are positioned as natural liquidity providers, while a unified wallet and policy layer allows banks to manage transactions without holding external coins. Collateral inefficiencies persist due to batch cycles and business hours, but infrastructure like CDS and CDCC in Canada could support a future collateral network, with the Bank of Canada already demonstrating settlement in central bank money on a ledger.
The future envisions Canada’s six largest banks, alongside others like Desjardins and ATB, issuing tokenized deposits and settling payments in real time against central bank money. Integration with existing systems like the Real-Time Rail and Lynx would eliminate settlement windows and intraday credit exposure. While the exact dominant networks remain uncertain, the value lies in connecting these rails to clients’ liquidity, FX, and cross-border needs, with infrastructure layers like Fireblocks providing consistent custody, signing, and policy controls across multiple networks.