The Bank of Canada (BoC), together with the country’s largest commercial banks, completed an experimental issuance of tokenized bonds with settlement carried out using central bank funds.
The Bank of Canada announced the successful completion of Project Samara, a joint pilot initiative involving the central bank and commercial banks aimed at testing the issuance and circulation of bonds based on distributed ledger technology (DLT).
As part of the experiment, Canada conducted its first issuance of bonds in tokenized form totaling $100 million Canadian dollars ($73.6 million), with settlement carried out using central bank funds.
Participants in Project Samara included:
- The Bank of Canada acted as the initiator and coordinator of the experiment, handled settlement for the transaction, and oversaw payment infrastructure, supervision, and risk assessment.
- Export Development Canada (EDC), the state export credit agency, served as the issuer of the tokenized bonds.
- RBC Capital Markets, the investment banking arm of Royal Bank of Canada (RBC), participated in structuring and placing the issuance, organizing the transaction and interacting with investors.
- RBC Investor Services, RBC’s investment services division, provided reconciliation and record-keeping services for the bonds within the pilot infrastructure.
- TD Bank Group, one of the largest banks in North America, through its TD Securities division, acted as a joint lead manager for the placement of the tokenized securities and participated in testing infrastructure solutions for secondary market operations.
During the project, EDC issued short-term bonds with a maturity of less than three months, denominated in Canadian dollars. Only a limited group of investors was allowed to participate in the primary purchase of the assets. Settlement for the transaction was conducted using central bank deposits for wholesale operations, and the entire lifecycle of the instrument, from issuance to secondary trading and redemption, was implemented using a distributed ledger.
For the experiment, the Samara Platform was created based on Hyperledger Fabric. The solution combined separate ledgers for recording bonds and cash and enabled instant delivery-versus-payment (DvP) settlements directly within the blockchain. The platform supported issuance, order submission, coupon payments, redemption, as well as secondary trading and clearing of tokenized bond transactions.
The main objective of Project Samara was to test the practical compatibility of DLT systems with traditional capital market infrastructure for the issuance, settlement, and secondary trading of tokenized securities in a real market environment using central bank assets as the settlement medium. The experiment also allowed participants to evaluate operational, legal, and regulatory aspects under controlled conditions.
According to the results of the experiment, participants reported improved operational efficiency and data quality, as well as simplified operational processes. At the same time, several limitations were identified, including:
- Increased technological complexity. While the use of DLT reduced counterparty and settlement risks, it introduced new operational risks related to technological infrastructure, auditing, and backup mechanisms.
- Additional liquidity management requirements. The new settlement model required a reassessment of approaches to liquidity provision and the management of participants’ cash positions.
- The need for new coordination, reporting, and supervisory mechanisms. The experiment demonstrated the need to adapt interaction procedures between participants and update supervisory and reporting processes when using DLT infrastructure.
According to Ron Morrow, Executive Director of Payments, Supervision, and Oversight at the Bank of Canada, the results of Project Samara formed the foundation for further research in the field of tokenization and settlement in capital markets.
In 2024, the Bank of Canada suspended the development of a retail central bank digital currency (CBDC), which had been underway since 2022, shifting its focus to regulating the payments sector and modernizing national payment systems.
