Canada’s biggest banks are exploring another way to move money digitally, but the technology being studied would not replace the coins and banknotes Canadians carry in their wallets.
Bank of Montreal, CIBC, National Bank, Royal Bank, Scotiabank and TD are jointly examining the use of “tokenized deposits,” according to a report by the Toronto Star.
Despite the terminology, the concept does not involve creating a new Canadian currency or cryptocurrency.
Instead, existing Canadian-dollar deposits held in commercial bank accounts would be represented digitally using distributed ledger technology, such as blockchain. The banks are examining whether the technology could eventually make some payments faster, more efficient and programmable.
SAME DOLLARS
For consumers, perhaps the most important distinction is that a tokenized Canadian dollar would remain a Canadian dollar deposited with a financial institution.
The Office of the Superintendent of Financial Institutions (OSFI), which regulates federally chartered banks, does not consider tokenized deposits legally different from conventional deposits simply because different technology is used to record them.
The first phase of the banking project is expected to examine how tokenized deposits could be transferred between Canadian financial institutions.
That would make the initiative largely a change to the infrastructure operating behind financial transactions rather than the introduction of a new form of money for consumers.
Canadians already conduct much of their financial activity without physically exchanging currency. Bank-account balances, Interac transfers, direct deposits and debit and credit card transactions all move money electronically.
Tokenization could change how some of those transactions are recorded and processed without changing the underlying value of the Canadian dollars involved.
CASH REMAINS
For coin and banknote collectors, the development inevitably raises a familiar question: what does another move toward digital payments mean for physical currency?
At this stage, there is no indication the banking initiative is intended to eliminate cash.
The Bank of Canada has repeatedly maintained that Canadians will continue to have access to banknotes as long as they want to use them.
Physical money also continues to play a role in everyday transactions despite the growth of electronic payments.
Bank of Canada payment research found cash accounted for about 18 per cent of point-of-sale transactions in 2025. At the same time, 80 per cent of Canadians surveyed reported having no plans to stop using cash.
Canada’s circulation coins likewise remain an established part of the country’s payment system.
EARLY STAGES
The tokenized-deposit initiative remains exploratory, meaning Canadians are unlikely to notice any immediate change in how they pay for everyday purchases.
No launch date has been announced.
The six banks are initially examining how the technology could operate between their institutions, although other Canadian deposit-taking institutions could eventually participate.
For now, the project represents another potential evolution in the technology used to move Canadian dollars — not a replacement for the dollars, coins and banknotes Canadians already use.