Canada's Central Bank Completes Pilot for Nation's Inaugural Tokenized Bond
The central bank collaborated with leading financial institutions in an experimental program to evaluate how distributed ledger technology could enhance the processes of bond issuance, trading and settlement.
The successful completion of a pilot program examining the application of distributed ledger technology within bond markets has been achieved in Canada, resulting in the creation of the nation's inaugural tokenized bond, as revealed in a Friday statement from the Bank of Canada.
The trial initiative, called Project Samara, brought together the Bank of Canada, Export Development Canada, Royal Bank of Canada and TD Bank Group, and investigated whether blockchain-based infrastructure could make bond issuance, trading and settlement more efficient.
During the course of the pilot program, Export Development Canada created a $100 million Canadian dollar ($73.6 million) bond featuring a maturity period of under three months for a restricted investor group. The financial instrument was issued, traded and settled using a distributed ledger platform, with transaction payments handled through wholesale central bank deposits instead of commercial bank money.
The technological platform, developed on Hyperledger Fabric, enabled participants to oversee the complete lifecycle of the security, encompassing issuance, bidding, coupon payments, redemption and secondary trading, while merging separate ledgers for cash and bonds to facilitate near-instant settlement.
The experimental program revealed various trade-offs associated with implementing distributed ledger systems within capital markets. Participants documented operational improvements and enhanced data integrity, while simultaneously recognizing challenges related to governance, regulatory compliance and integration.
Researchers indicated that the findings demonstrated how distributed ledger systems have the potential to enhance settlement efficiency and minimize counterparty risk, although widespread adoption might face delays due to infrastructure and regulatory obstacles.
Tokenized bonds gain traction among governments and banks
Canada's experimental program contributes to an expanding collection of trials conducted by governments and financial institutions investigating how blockchain-powered systems can transform the issuance and settlement of conventional financial assets.
An initial case emerged in 2018, when the World Bank created a two-year A$110 million "Bond-i" debt instrument coordinated by the Commonwealth Bank of Australia. The issuance is broadly regarded as the first bond whose creation, allocation and lifecycle management were documented on a blockchain.
In 2022, the Monetary Authority of Singapore initiated Project Guardian to examine how distributed ledger technology could be utilized in wholesale financial markets. Initial industry pilots investigated decentralized finance applications for lending and borrowing tokenized bonds and deposits on public blockchains.
In 2023, Hong Kong created a tokenized green bond utilizing distributed ledger infrastructure, with the issuance coordinated by the Hong Kong Monetary Authority. The program was broadened with supplementary digital bond offerings in 2024 and 2025.
The World Bank created a Swiss franc digital bond on the SIX Digital Exchange in 2024 with settlement utilizing wholesale central bank digital currency supplied by the Swiss National Bank.