Canada Tests Tokenized Bond Settlement With Central Bank Money

TLDR

• The Bank of Canada completed a pilot for settling a live tokenized bond using central bank deposits.
• Export Development Canada issued a 100 million dollar bond on the Samara Platform.
• The platform enabled instant settlement through atomic transactions on a distributed ledger infrastructure.
• Participants reported improved workflows and reduced counterparty and settlement risk.
• The pilot also identified operational complexity and regulatory alignment challenges.

---

The Bank of Canada has completed a live pilot that tested digital bond issuance on distributed ledger infrastructure. The central bank worked with RBC Capital Markets, TD Bank Group, and Export Development Canada on the initiative. The project executed a $100 million bond using central bank money for trading and settlement.

Project Samara Tests Tokenized Bond Issuance On-chain

The Bank of Canada led Project Samara in partnership with RBC Capital Markets, TD Bank Group, and Export Development Canada. The participants built the Samara Platform on Hyperledger Fabric to support end-to-end bond transactions. The platform processed issuance, bidding, coupon payments, redemption, and secondary trading within a unified framework.

Export Development Canada issued a $100 million tokenized bond during the pilot. The platform traded and settled the bond using central bank deposits instead of commercial bank money. The system integrated separate bond and cash ledgers to enable atomic settlement. As a result, the platform completed transactions instantly and reduced counterparty exposure.

The architecture allowed secondary trading directly on-chain between approved participants. Therefore, the system removed traditional delays between trade execution and final settlement. Participants reported improved operational workflows and stronger data integrity during the trial. They also confirmed that the system automates reconciliation across counterparties.

Ron Morrow, Executive Director of Payments, Supervision, and Oversight at the Bank of Canada, addressed the outcome. He said, “Project Samara shows how the public sector and industry can work together to harness innovation in the payment ecosystem.” His statement underscored collaboration between regulators and market institutions.

The project extended earlier work under the Jasper research series. That program examined digital currencies and financial technology within the Canadian market infrastructure. However, Project Samara used a real bond funded and traded with central bank money.

Pilot Highlights Efficiency Gains and Operational Challenges

Participants identified efficiency gains across settlement and reporting functions. They cited faster workflows and streamlined post-trade processes. They also reported reduced counterparty and settlement risk due to atomic settlement.

The platform demonstrated how tokenized assets could move between parties without manual reconciliation. Consequently, the system reduced operational friction common in conventional bond markets. Secondary trading occurred directly on the ledger between authorized entities.

However, the pilot revealed operational complexity within the new framework. Participants described increased coordination requirements and new governance structures. They also reported higher liquidity costs linked to the platform design.

Technology risks emerged around auditability and fallback arrangements. These risks introduced vulnerabilities that do not exist in the current market infrastructure. The findings also identified gaps in existing regulatory frameworks.

Centralized functions such as marketplace operation and custody required further alignment with distributed ledger principles. Off-platform trade reporting created regulatory questions under current rules.

Jim Byrd, Global Head of Macro Products at RBC Capital Markets, commented on the settlement process. He said the project represented “reimagining how issuers and investors can interact with fixed-income markets.” Scott Moore, Executive Vice-President of Finance and Chief Operating Officer at Export Development Canada, described the issuance as “an important step in deepening our understanding of tokenization.”

The post Canada Tests Tokenized Bond Settlement With Central Bank Money appeared first on Blockonomi.