Overview
Bank of Montreal (BMO) said on Tuesday it will develop tokenized cash functionality in partnership with CME Group and Google Cloud to address client demand for real-time payment capabilities as trading activity increasingly moves toward continuous, around-the-clock markets. The bank described tokenized cash as a way to achieve near-instant settlement, reduce settlement delays, and unlock capital more quickly to support uninterrupted market operations.
How it will work
Under the planned arrangement, BMO clients will be able to convert U.S. dollars held at the bank into a tokenized instrument. That instrument can then be used as an institutional settlement medium for margined products traded at the CME Group exchange - derivatives contracts where traders post collateral to cover potential losses. By enabling digital-dollar settlement that can move continuously, the bank said the capability is intended to reduce funding gaps and operational frictions that arise when markets require action outside traditional banking hours.
Scope and timing
BMO said the tokenized cash instrument is intended for regulated financial firms active in capital markets and commercial banking. The bank expects the offering to launch in the second half of 2026, but highlighted that the timing remains subject to regulatory approval. In parallel, the lender is also introducing tokenized deposits, which it said will let clients use the bank-held money in digital form for payments, treasury movements and programmable cash applications.
Management comment
"As the global ecosystem for stablecoins and tokenized deposits continues to expand rapidly, this capability marks significant progress of BMO ambition to bring regulated money movement into a modern, programmable environment," said Derek Vernon, head of BMO North American Treasury and Payment Solutions. "Clients will be able to move funds continuously when markets demand it, not when banking hours allow it - reducing funding gaps and operational friction."
Intended benefits
BMO framed the initiative as a response to rising client needs for round-the-clock infrastructure to meet margin calls and to manage trading and settlement activity as global markets shift toward 24/7 operations. The bank highlighted near-instant settlement and faster capital release as primary efficiencies expected from tokenized cash, along with expanded use cases through programmable cash and digital treasury movements.
Limitations noted by the bank
BMO made clear that the initiative is targeted at regulated financial firms and that launch timing depends on receiving required regulatory approvals. Beyond that, the bank noted the offering will be introduced as a digital complement to existing commercial banking and capital markets services.